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AMR Corporation Reports Second Quarter 2012 Results

$6.5 Billion in Quarterly Revenue, Highest in Company History

Net Profit of $95 Million, Excluding Reorganization and Special Items, a $381 Million Improvement Over a Year Ago

Net Loss of $241 Million; Operating Income of $142 Million

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FORT WORTH, Texas, July 18, 2012 /PRNewswire/ -- AMR Corporation, the parent company of American Airlines, Inc., today reported second quarter revenue of $6.5 billion, an increase of 5.5 percent year-over-year and the highest quarterly revenue in company history.

In the second quarter of 2012, the company reported a net profit of $95 million, excluding reorganization and special items – a $381 million improvement over the second quarter of 2011. AMR incurred a net loss of $241 million compared to a net loss of $286 million in the same period of 2011.

"Thanks to the great work of the entire American team, this was a time of exceptional improvement. Our revenue performance has topped the industry for several months, leading to our first second quarter profit in five years excluding reorganization and special items," said Tom Horton, AMR's Chairman and Chief Executive Officer. "And this improvement reflects only a fraction of our ongoing restructuring progress. While there is still much to be done, we expect this momentum to build quickly as the new American re-emerges as an industry leader."

Financial and Operational Performance
Consolidated passenger revenue per available seat mile (unit revenue) grew 9.1 percent compared to the second quarter of 2011, and mainline passenger unit revenue increased 8.7 percent.

  • Consolidated passenger yield, representing average fares paid, increased 7.1 percent year-over-year in the second quarter of 2012, and mainline passenger yield increased 6.8 percent.
  • Mainline capacity, or total available seat miles, in the second quarter of 2012 decreased 2.4 percent compared to the same period in 2011.
  • American's second quarter 2012 mainline load factor, or the percentage of total seats filled, was 85.1 percent – a record for any quarter.

The company's revenue performance was driven by year-over-year yield improvement and a higher consolidated load factor of 84.5 percent – a record for any quarter as well. Domestic unit revenue improved 8.6 percent in the second quarter versus the same period last year and, for the second consecutive quarter, the company experienced unit revenue increases across all five of its hubs. These results were supported by strong corporate revenue growth.

International unit revenue increased 9.0 percent in the second quarter, driven by increased load factors across all entities, and strong yield performance. Premium cabin demand improved significantly in both the Atlantic and Pacific entities, generating unit revenue increases of 8.5 percent and 18.1 percent, respectively.  American and its joint-business partners, British Airways and Iberia over the Atlantic, and Japan Airlines over the Pacific, have gained momentum in attracting high-value customers to the airlines' enhanced networks. The Latin American entity posted a 6.7 percent unit revenue increase in the second quarter of 2012, including yield improvements in Mexico and Central and South America.

"Our improved financial results were driven by strong unit revenue performance, with growth outpacing the industry in each of the three months of the second quarter," said Bella Goren, AMR's Chief Financial Officer. "Our consolidated unit revenue rose 9.1 percent, with increases across all five of our hubs and across all international entities. These industry-leading year-over-year revenue increases reflect the strength of our network and alliances, our focus on the customer, and the effectiveness of our overall strategy."

AMR's consolidated operating expenses, excluding special items, were $6.2 billion, essentially flat with the same period last year. Excluding fuel costs, consolidated unit costs increased 2.3 percent year-over-year.

Reorganization Items and Special Charges
The second quarter 2012 results include $336 million in special charges and reorganization items.

  • Of that amount, $106 million is related to a special charge, primarily associated with employee severance-related costs.
  • The company recognized $230 million in reorganization items resulting from its and certain of its direct and indirect U.S. subsidiaries' voluntary petitions for reorganization under Chapter 11 on Nov. 29, 2011. These items are primarily from estimated claims associated with restructuring the financing arrangements for certain aircraft and rejecting certain special facility revenue bonds, as well as professional fees.

Fuel Impact
Taking into account the impact of fuel hedging, AMR paid approximately $3.24 per gallon for jet fuel in the second quarter of 2012 versus approximately $3.12 per gallon in the second quarter of 2011, a 3.8 percent increase. As a result, the company paid $81 million more for fuel in the second quarter of 2012 than it would have paid at prevailing prices from the prior-year period.

Cash Position
AMR ended the second quarter with approximately $5.8 billion in cash and short-term investments, including a restricted cash balance of $772 million, compared to a balance of approximately $5.6 billion in cash and short-term investments, including a restricted balance of approximately $457 million, at the end of the second quarter of 2011.

At Nov. 30, 2011, the company had approximately $4.8 billion in cash and short-term investments, including a restricted cash balance of $693 million.

Fleet Renewal Progress
Later this year, the company will start placing into service the newest addition to its fleet, the Boeing 777-300ER, which will showcase a number of special features, including fully lie-flat First and Business Class seating, with direct aisle access from every seat; specially designed Main Cabin Extra seating with more legroom and comfort; international Wi-Fi and in-seat entertainment throughout all cabins.

In addition, the company recently unveiled plans for upgrading its international widebody fleet of Boeing 777-200ERs and Boeing 767-300ERs, which will also offer industry-leading interiors and amenities as well as fully lie-flat Business Class seats with aisle access for every seat.

About American Airlines
American Airlines, American Eagle® and the AmericanConnection® carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,500 daily flights. The combined network fleet numbers more than 900 aircraft. American's award-winning website, AA.com®, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld® alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members and members-elect serve more than 900 destinations with more than 9,000 daily flights to 150 countries and territories. American Airlines, Inc. and American Eagle Airlines, Inc. are subsidiaries of AMR Corporation. AmericanAirlines, American Eagle, AmericanConnection, AA.com, and AAdvantage are trademarks of American Airlines, Inc. AMR Corporation common stock trades under the symbol "AAMRQ" on the OTCQB marketplace, operated by OTC Markets Group.

Cautionary Statement Regarding Forward-Looking Statements and Information
This news release could be viewed as containing forward-looking statements or information. Actual results may differ materially from the results suggested by the statements and information contained herein for a number of reasons, including, but not limited to, the impact of the restructuring of the company and certain of its U.S. subsidiaries, the company's ability to refinance, extend or repay its near and intermediate term debt, the company's substantial level of indebtedness and related interest rates, the potential impact of volatile and rising fuel prices, impairments and restructuring charges. Because of the company's restructuring, there can be no assurance as to the future value of the company's securities, including its common stock, which could have little or no value at the end of the restructuring process. Accordingly, the company urges that caution be exercised with respect to existing and future investments in any of these securities (including the company's common stock) or other claims. Readers are referred to the documents filed by the company with the Securities and Exchange Commission, including the company's Form 10-K for the period ended December 31, 2011, which further identify the important risk factors that could cause actual results to differ materially from the forward-looking statements in this news release. The company disclaims any obligation to update any forward-looking statement or information.

Detailed financial information follows:


 

AMR CORPORATION



CONSOLIDATED STATEMENT OF OPERATIONS



(in millions, except per share amounts)



(Unaudited)








Three Months Ended
June 30,


Percent

Change


2012


2011


Revenues






    Passenger - American Airlines

$    4,837


$    4,557


6.1

                      - Regional Affiliates

790


711


11.1

    Cargo

175


187


(6.6)

    Other revenues

650


659


(1.4)

      Total operating revenues

6,452


6,114


5.5







Expenses






  Aircraft fuel

2,209


2,202


0.3

  Wages, salaries and benefits

1,778


1,764


0.8

  Other rentals and landing fees

333


355


(6.2)

  Maintenance, materials and repairs

357


334


6.8

  Depreciation and amortization

261


266


(2.0)

  Commissions, booking fees and credit card expense

263


268


(2.1)

  Aircraft rentals

130


158


(18.0)

  Food service

130


133


(1.6)

  Special charges

106


-


*

  Other operating expenses

743


712


4.4

    Total operating expenses

6,310


6,192


1.9







Operating Income (Loss)

142


(78)


*







Other Income (Expense)






  Interest income

7


7


(3.9)

  Interest expense

(164)


(215)


(23.8)

  Interest capitalized

12


10


18.4

  Miscellaneous – net

(8)


(10)


(20.0)

    Total other income

(153)


(208)


(26.4)







Income (Loss) Before Reorganization Items, Net

(11)


(286)


(96.1)

Reorganization Items, Net

(230)


-


*

Income Before Income Taxes

(241)


(286)


(15.7)

Income tax

-


-


-

Net Income

$     (241)


$     (286)


(15.7)







Earnings Per Share






Basic

$    (0.72)


$    (0.85)



Diluted

$    (0.72)


$    (0.85)









Number of Shares Used in Computation






  Basic

335


335



  Diluted

335


335









* Greater than 100%






 

AMR CORPORATION

OPERATING STATISTICS

(Unaudited)


OPERATING STATISTICS BY REGIONAL ENTITY



American Airlines, Inc.

Three Months Ended June 30, 2012

Entity Results

RASM1

(cents)


Y-O-Y

Change


ASMs2

(billions)


Y-O-Y

Change











DOT Domestic

12.75


8.6%


22.7


(1.9)%


International

12.46


9.0


15.6


(3.0)


   DOT Latin America

13.61


6.7


7.3


1.3


   DOT Atlantic

11.76


8.5


6.0


(9.2)


   DOT Pacific

10.67


18.1


2.3


1.3


American Airlines, Inc.

Three Months Ended June 30, 2012

Entity Results

 

Load Factor

(pts)


Y-O-Y

Change

(pts)


 

Yield

(cents)


 

Y-O-Y

Change











DOT Domestic

86.3


0.7


14.78


7.7%


International

83.4


2.7


14.94


5.5


   DOT Latin America

80.6


0.7


16.88


5.9


   DOT Atlantic

85.8


2.9


13.70


4.9


   DOT Pacific

86.1


9.1


12.39


5.7











1 Revenue per Available Seat Mile







2 Available Seat Miles








 

AMR CORPORATION



NON-GAAP AND OTHER RECONCILIATIONS



(in millions)



(Unaudited)








Three Months Ended
June 30,


Percent


2012


2011


Change







Net Income

$        (241)


$      (286)


(15.7)

Special Charges

106


-


*

Reorganization Items

230


-


*

Net Income Excluding Reorganization and Special Items

95


(286)


*

 

AMR CORPORATION



OPERATING STATISTICS



(Unaudited)








Three Months Ended
June 30,


Percent

Change


2012


2011


American Airlines, Inc. Mainline Jet Operations






Revenue passenger miles (millions)

32,586


32,788


(0.6)

Available seat miles (millions)

38,289


39,228


(2.4)

Cargo ton miles (millions)

456


459


(0.7)

Passenger load factor

85.1%


83.6%


1.5 pts

Passenger revenue yield per passenger mile (cents)

14.84


13.90


6.8

Passenger revenue per available seat mile (cents)

12.63


11.62


8.7

Cargo revenue yield per ton mile (cents)

38.34


40.76


(5.9)

Operating expenses per available seat mile, excluding Regional

   Affiliates (cents) (1)

14.55


13.85


5.0

Fuel consumption (gallons, in millions)

604


627


(3.7)

Fuel price per gallon (dollars)

3.24


3.11


4.1













Regional Affiliates






Revenue passenger miles (millions)

2,683


2,585


3.8

Available seat miles (millions)

3,447


3,412


1.0

Passenger load factor

77.8%


75.8%


2.1 pts













AMR Corporation






Average Equivalent Number of Employees






American Airlines

65,300


66,800



Other

12,800


13,700



   Total

78,100


80,500




(1) Excludes $756 million and $793 million of expense incurred related to Regional Affiliates in 2012 and 2011, respectively.

 

AMR CORPORATION


NON-GAAP AND OTHER RECONCILIATIONS


(Unaudited)




American Airlines, Inc. Mainline Jet Operations
(in millions, except as noted)

Three Months Ended
June 30,


2012


2011

Total operating expenses

$   6,325


$   6,225

Less: Operating expenses incurred related to Regional Affiliates

756


793

Operating expenses excluding expenses incurred related to Regional Affiliates

$   5,569


$   5,432

American mainline jet operations available seat miles

38,289


39,228

Operating expenses per available seat mile, excluding Regional Affiliates (cents)

14.55


13.85





Percent change

5.0%



 

American Airlines, Inc. Mainline Jet Operations
(in millions, except as noted)

Three Months Ended
June 30,


2012


2011

Total operating expenses

$   6,325


$   6,225

Less: Operating expenses incurred related to Regional Affiliates

756


793

Operating expenses excluding expenses incurred related to Regional Affiliates

$   5,570


$   5,432

American mainline jet operations available seat miles

38,289


39,228

Operating expenses per available seat mile, excluding Regional Affiliates (cents)

14.55


13.85





Less: Impact of reorganization and special Items (cents)

0.28


-

Operating expenses per available seat mile, excluding impact of reorganization
and special items (cents)

14.27


13.85





Percent change

3.1%







Less: Fuel cost per available seat mile (cents)

5.11


4.97

Operating expenses per available seat mile, excluding impact of reorganization
and special items, and fuel expenses (cents)

9.16


8.88





Percent change

3.2%







Note: The company believes that operating expenses per available seat mile, excluding the cost of fuel, reorganization items and special items, assists investors in understanding the impact of fuel prices and special items on the company's operations.

 

AMR CORPORATION

NON-GAAP AND OTHER RECONCILIATIONS

(Unaudited)



AMR Corporation Consolidated
(in millions, except as noted)

Three Months Ended
June 30,

 


2012


2011

Operating expenses per available seat mile (cents)

15.12


14.52

Less: Impact of reorganization and special items (cents)

0.25


-





Operating expenses per available seat mile, excluding impact of reorganization
and special items (cents)

14.87


14.52





Percent change

2.4%







Less: Fuel expense per available seat mile (cents)

5.30


5.16

Operating expenses per available seat mile, excluding impact of reorganization
and special items and fuel expense (cents)

9.57


9.36





Percent change

2.3%




 

AMR CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share amounts)

(Unaudited)






Six Months Ended
June 30,


Percent

Change


2012


2011


Revenues






    Passenger - American Airlines

$   9,394


$    8,691


8.1

                      - Regional Affiliates

1,460


1,288


13.3

    Cargo

343


356


(3.7)

    Other revenues

1,293


1,312


(1.4)

      Total operating revenues

12,490


11,647


7.2







Expenses






  Aircraft fuel

4,375


4,044


8.2

  Wages, salaries and benefits

3,560


3,486


2.1

  Other rentals and landing fees

661


707


(6.5)

  Maintenance, materials and repairs

700


639


9.5

  Depreciation and amortization

521


542


(3.9)

  Commissions, booking fees and credit card expense

529


524


0.9

  Aircraft rentals

272


318


(14.4)

  Food service

255


253


0.6

  Special charges

117


-


*

  Other operating expenses

1,447


1,443


0.3

    Total operating expenses

12,437


11,956


4.0







Operating Income (Loss)

53


(309)


*







Other Income (Expense)






  Interest income

13


14


(6.8)

  Interest expense

(342)


(415)


(17.6)

  Interest capitalized

24


17


41.9

  Miscellaneous – net

(18)


(29)


(37.9)

    Total other income

(323)


(413)


(21.8)







Income (Loss) Before Reorganization Items, Net

(270)


(722)


(62.6)

Reorganization Items, Net

(1,630)


-


*

Income Before Income Taxes

(1,900)


(722)


*

Income tax

-


-


-

Net Income

$  (1,900)


$     (722)


*







Earnings Per Share






Basic

$    (5.67)


$    (2.16)



Diluted

$    (5.67)


$    (2.16)









Number of Shares Used in Computation






  Basic

335


334



  Diluted

335


334



* Greater than 100%






 

AMR CORPORATION

OPERATING STATISTICS

(Unaudited)


OPERATING STATISTICS BY REGIONAL ENTITY




American Airlines, Inc.

Six Months Ended June 30, 2012


Entity Results

RASM1

(cents)


Y-O-Y

Change


ASMs2

(billions)


Y-O-Y

Change











DOT Domestic

12.35


9.1%


45.2


(1.7)%


International

12.29


9.6


31.0


(0.3)


   DOT Latin America

13.83


8.9


15.8


3.2


   DOT Atlantic

10.96


8.8


10.7


(7.4)


   DOT Pacific

10.09


12.3


4.6


6.3












American Airlines, Inc.

Six Months Ended June 30, 2012


Entity Results

 

Load Factor

(pts)


Y-O-Y

Change

(pts)


 

Yield

(cents)


 

Y-O-Y

Change











DOT Domestic

83.3


1.3


14.84


7.4%


International

80.3


2.3


15.29


6.4


   DOT Latin America

79.9


(0.1)


17.31


9.0


   DOT Atlantic

80.4


4.2


13.63


3.1


   DOT Pacific

81.9


5.7


12.32


4.5











1 Revenue per Available Seat Mile







2 Available Seat Miles








 

AMR CORPORATION

NON-GAAP AND OTHER RECONCILIATIONS

(in millions)

(Unaudited)






Six Months Ended
June 30,


Percent

Change


2012


2011


Net Income

$  (1,900)


(722)


*

Special Charges

117


31


*

Reorganization Items

1,630


-


*

Net Income Excluding Reorganization and Special Items

(153)


(691)


(77.9)

* Greater than 100%

 

AMR CORPORATION

OPERATING STATISTICS

(Unaudited)



Six Months Ended
June 30,


Percent

Change


2012


2011


American Airlines, Inc. Mainline Jet Operations






Revenue passenger miles (millions)

62,546


61,953


1.0

Available seat miles (millions)

76,207


77,078


(1.1)

Cargo ton miles (millions)

901


898


0.3

Passenger load factor

82.1%


80.4%


1.7 pts

Passenger revenue yield per passenger mile (cents)

15.02


14.03


7.1

Passenger revenue per available seat mile (cents)

12.33


11.28


9.3

Cargo revenue yield per ton mile (cents)

38.07


39.66


(4.0)

Operating expenses per available seat mile, excluding

   Regional Affiliates (cents) (1)

14.38


13.63


5.5

Fuel consumption (gallons, in millions)

1,196


1,224


(2.2)

Fuel price per gallon (dollars)

3.24


2.93


10.3







Regional Affiliates






Revenue passenger miles (millions)

5,054


4,720


7.1

Available seat miles (millions)

6,781


6,567


3.2

Passenger load factor

74.5%


71.9%


2.7 pts







AMR Corporation






Average Equivalent Number of Employees






American Airlines

65,500


66,250



Other

13,000


13,500



Total

78,500


79,750




(1) Excludes $1.5 billion and $1.5 billion of expense incurred related to Regional Affiliates in 2012 and 2011, respectively.

Current AMR Corp. news releases can be accessed at http://www.aa.com

SOURCE AMR Corporation



RELATED LINKS
http://www.aa.com

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