Company Watch - American Airlines

AirGuide Business, Jan 21, 2008

Jan 21, 2008

American Airlines parent AMR Corp. reported full-year 2007 net income of $504 million, more than double the $231 million earned in the prior year, despite a fourth-quarter net loss of $69 million that it attributed largely to "record fuel prices." The quarterly loss was reversed from a profit of $17 million in the year-ago period and ended the carrier's streak of six straight quarters in the black. But Chairman and CEO Gerard Arpey noted that AMR posted back-to-back profitable years for the first time since 1999-2000 despite "enormous challenges from unprecedented weather disruptions, air traffic control problems and record fuel prices." American Airlines expects to pay an average of $2.65 per gal. of jet fuel in 2008, up 25% over $2.12 in 2007. AMR's net debt at the end of 2007 was $11 billion, down 19% from $13.6 billion at the end of 2006. Jan 18, 2008

American Doubles Fuel Surcharge To $40 On Round Trips. American Airlines, the nation's largest carrier, doubled its fuel surcharge on Thursday to $40 per round trip just days after a slightly larger increase led by United Airlines failed. A spokesman for American confirmed that the airline raised its previous fuel surcharge from $10 one-way and $20 round trip. The Ft. Worth-based parent of American Airlines reported a fourth-quarter loss due to skyrocketing fuel prices and a greater number of weather-related flight cancellations. Jan 18, 2008

American Airlines parent AMR Corp. reported full-year operating revenue increased 1.6% to $22.94 billion while expenses rose 2.2% to $21.97 billion, producing operating income of $965 million, down 9% from $1.06 billion in 2006. Full-year mainline traffic declined 0.7% to 138.45 billion RPMs on a 2.4% drop in capacity to 169.91 billion ASMs, producing a load factor of 81.5%, up 1.4 points. Passenger yield grew 2.8% to 13.17 cents as PRASM lifted 4.6% to 10.73 cents and CASM increased 4.4% to 11.38 cents. Jan 18, 2008

American Airlines Executive VP-Finance and Planning and CFO Tom Horton said AMR will look to offset fuel costs by targeting $150 million in cost cuts in 2008 and keeping capacity growth to a minimum. "High fuel prices are a serious concern for the future," he said yesterday during a conference call with analysts and reporters. "We continue to take a very measured approach to capacity." The airline will take delivery of no new aircraft in 2008 and plans to grow mainline capacity by just 1% year-over-year. The small rise will occur only because weather forced American Airlines to operate fewer flights than planned in 2007; capacity growth actually will be flat on a schedule-on-schedule basis. Jan 18, 2008

American parent AMR's pilot union to push ahead for federal mediator. The American Airlines pilot union intends to submit paperwork for a federal mediator within the next day or two to help end more than a year's worth of negotiations over wages and benefits. On Monday, American Airlines said it would not join the Allied Pilots Association in requesting mediation, preferring instead to direct bargaining. The union said it would continue its request to the National Mediation Board, which can act as a go-between for both parties even if one group doesn't agree to its involvement. According to the 1936 Railway Labor Act, airline employees are not allowed to strike to resolve labor disputes and can instead use a federal mediator. AMR, American Airlines parent company, saw its shares rise 3.5% to $13.59. Jan 16, 2008

Appeals court tosses verdict against airline. Rules civil rights were not violated. A Florida man of Portuguese descent did not have his civil rights violated when the captain of an American Airlines flight ordered him off his flight for security reasons, a federal appeals court in Boston ruled this week. The appeals court overturned a federal jury's verdict in the case, ruling it had erred in ordering American Airlines to pay $400,000 in damages to the passenger, John Cerqueira, because the jurors received the wrong instructions. According to the ruling by the appeals court, the district court failed to inform jurors that the law allows airlines to refuse to transport anyone who "the carrier decides is, or might be, inimical to safety." Jan 14, 2008

American Airlines flew 11.24 billion RPMs in December, down 1% from the year-ago month. Capacity fell 0.7% to 14.25 billion ASMs, lowering load factor 0.3 point to 78.8%. American Eagle flew 671.4 million RPMs, down 6.7%, against a 5.6% fall in ASMs to 967.7 million. Load factor dropped 0.8 point to 69.4%. Jan 14, 2008

Appeals court tosses verdict against airline. Rules civil rights were not violated. A Florida man of Portuguese descent did not have his civil rights violated when the captain of an American Airlines flight ordered him off his flight for security reasons, a federal appeals court in Boston ruled this week. The appeals court overturned a federal jury's verdict in the case, ruling it had erred in ordering American Airlines to pay $400,000 in damages to the passenger, John Cerqueira, because the jurors received the wrong instructions. According to the ruling by the appeals court, the district court failed to inform jurors that the law allows airlines to refuse to transport anyone who "the carrier decides is, or might be, inimical to safety." Jan 14, 2008