Thomas W. Horton
Chairman, President
& Chief Executive Officer
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Isabella Goren
Senior Vice President
& Chief Financial Officer
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Click photo for print quality image. Related Information
CEO Letter to American Employees
1Q 2013 Full Release
Investor Relations
AMR Chapter 11 Plan of Reorganization
AMR Proposed Disclosure Statement
AMR Form S-4
Annual & Quarterly Reports
AMR Restructuring
The New American
NewAmericanArriving.com Media Contact Information
Media Relations
(817) 967-1577 MediaRelations@aa.com | | AMR Corporation, the parent company of American Airlines, Inc., today reported results for the first quarter ended March 31, 2013. Key highlights include: - Revenue of $6.1 billion, the highest first quarter revenue in company history
- Net profit of $8 million, excluding reorganization and special items, a $256 million improvement year-over-year, and AMR’s first profitable first quarter since 2007
- Operating profit of $125 million, excluding special items, a $203 million improvement over first quarter 2012. GAAP operating profit of $52 million, a $141 million improvement year-over-year
- Consolidated unit costs, excluding fuel and special items, improved 3.2 percent year-over-year, marking the second consecutive quarter of non-fuel unit costs reduction
- Building on its fleet renewal momentum, American took delivery of 12 new aircraft in the first quarter (nine 737-800s and three 777-300ERs)
- On April 15, AMR filed its Plan of Reorganization and Disclosure Statement; the hearing to consider approval of the Disclosure Statement is scheduled for June 4
- On April 15, AMR filed its Registration Statement with the SEC to move forward with its anticipated merger with US Airways
In the first quarter, AMR reported a net profit of $8 million, excluding reorganization and special items, a $256 million improvement compared to the prior-year period. AMR incurred a GAAP net loss of $341 million versus a GAAP net loss of $1.7 billion in the first quarter of 2012. First quarter results were negatively impacted by $349 million of reorganization and special items, which are detailed below. Restructuring Progress
Year-over-year cost reductions in salary, benefit and non-operating expenses were driven by AMR’s restructuring efforts.
- Through the restructuring process, American reached six-year agreements with all workgroups and reduced management positions, making American’s management staffing the leanest among network carriers.
- AMR also realized improvements in depreciation and amortization expense, offset by increased aircraft rent expense with the company taking delivery of a combined 36 new modern, fuel efficient Boeing 737-800 and 777-300ER aircraft over the past 12 months, all of which have been leased.
- Throughout the remainder of the year, AMR expects to realize additional savings improvements as the company gains court approval to implement new terms negotiated with certain vendors and suppliers.
- It also plans to build on momentum from restructuring by implementing new scope clauses established in new labor agreements that will enable AMR to compete more effectively in certain markets by better matching aircraft size with demand as American begins operating larger regional jets and expands codeshare agreements.
Revenue Performance
- For the first quarter of 2013, AMR reported consolidated revenue of $6.1 billion, approximately 1.0 percent higher compared to the prior-year period on 1.3 percent less capacity.
- First quarter consolidated and mainline passenger revenue per available seat mile (PRASM) increased 2.6 percent and 2.7 percent year-over-year, respectively.
- Consolidated revenue performance was driven by record passenger yield, or average fares paid, of 16.27 cents per mile, a 0.6 percent year-over-year improvement, and strong consolidated and mainline load factors, or percentage of seats filled, of 79.9 percent and 80.6 percent, respectively.
- Domestic PRASM improved 2.7 percent in the first quarter versus the first quarter of 2012, with PRASM increases across all five of American's hubs, with the Los Angeles and Chicago hubs showing particular strength.
- International PRASM increased 2.6 percent in the first quarter of 2013 over the prior-year period, driven by strong performance in the Atlantic entity. Absolute PRASM and yields in the Latin entity remain robust and further American's belief that targeted growth in the region will be accretive to earnings.
Operating Expense - For the first quarter, AMR's consolidated operating expenses decreased $80 million, or 1.3 percent, versus the same period in 2012. Excluding special items, AMR's consolidated operating expenses decreased $142 million, or 2.3 percent, year-over-year.
- American's mainline cost per available seat mile (unit cost) in the first quarter decreased 0.6 percent, including special items in both periods, and 1.7 percent versus the same period last year, excluding special items.
- Taking into account the impact of fuel hedging, AMR paid $3.26 per gallon for jet fuel in the first quarter of 2013 versus $3.24 per gallon in the first quarter of 2012 , a 0.7 percent increase. As a result, the company paid $14 million more for fuel in the first quarter of 2013 than it would have paid at prevailing prices from the prior-year period.
- Excluding fuel and special items, mainline and consolidated unit costs in the first quarter of 2013 decreased 4.1 percent and 3.2 percent year-over-year, respectively, primarily driven by the company's restructuring efforts.
- AMR achieved an operating profit of $125 million and an operating margin of approximately 2.0 percent, an improvement of approximately $203 million and 3.3 points, respectively, over the prior-year period, excluding special items.
Cash Position - AMR ended the first quarter with approximately $5.1 billion in cash and short-term investments, including a restricted cash balance of $853 million, compared to a balance of approximately $5.6 billion in cash and short-term investments, including a restricted balance of approximately $771 million, at the end of the first quarter of 2012.
Operational Performance - American ran a strong operation in the first quarter, achieving an on-time arrival rate of 80.8 percent. In the month of March, 81.8 percent of American’s mainline flights arrived on time, American’s best March performance since 2003.
- American’s solid operational results for the quarter also include posting a completion factor of 98.4 percent.
Pending Merger Transaction - On Feb. 14, AMR and US Airways Group, Inc. (NYSE: LCC) announced that the boards of directors of both companies unanimously approved a definitive merger agreement under which the companies will combine to create one of the world’s largest global airlines, which will have an implied combined equity value of approximately $11 billion based on the price of US Airways stock as of Feb. 13, 2013.
- Merger benefits are included in the full release (make this link to the news release).
- American’s proposed Plan of Reorganization provides the potential for full recovery for American’s creditors and a recovery of at least 3.5 percent of the aggregate diluted common stock of the combined airline for the company’s shareholders. It is unusual in Chapter 11 cases – and unprecedented in recent airline restructurings – for shareholders to receive meaningful recoveries.
Merger Milestones The following merger milestones have been achieved to date: - Jan. 31: Filed the required notification materials under the Hart-Scott-Rodino Act (HSR) with the U.S. Department of Justice and U.S. Federal Trade Commission
- Feb. 14: Announced the definitive merger agreement between AMR and US Airways
- Feb. 25: AMR and US Airways announced that Beverly Goulet, senior vice president and chief integration officer for American Airlines, and Scott Kirby, president of US Airways, will jointly lead a transition-planning team to design and oversee the new American integration
- March 21: AMR and US Airways announced the creation of the Integration Management Office (IMO) to support the transition team and the selection of McKinsey & Company to advise the IMO
- March 28: AMR received court approval to merge with US Airways
- April 15: AMR filed its Chapter 11 Plan of Reorganization, Disclosure Statement and Registration Statement; a hearing to consider approval of the Disclosure Statement is scheduled for June 4
The merger is conditioned on the approval by the Court, regulatory approvals, approval by US Airways shareholders, other customary closing conditions, and confirmation and consummation of the Plan of Reorganization in accordance with the provisions of the Bankruptcy Code. The combination is expected to be completed in the third quarter of 2013. Prior to closing of the transaction, the transition-planning team composed of leaders from both companies will develop an integration plan designed to assure a smooth and sustainable transition with a focus on maximizing the potential value of the merger. Reorganization and Special Items - AMR's first quarter 2013 results include the impact of $349 million in reorganization and special items
Capacity Guidance - AMR estimates consolidated capacity in the second quarter of 2013 to be up approximately 1.0 percent versus the second quarter of 2012
- For the full year 2013, consolidated capacity is estimated to increase approximately 1.5 percent versus the prior year
To view the full 1Q 2013 press release, click here. |