- The Washington Times - Wednesday, October 22, 2003

FORT WORTH, Texas (AP) — The parent of American Airlines reported a tiny profit in the third quarter, breaking a string of losses at the world’s largest carrier that began more than two years ago and worsened after the terror attacks of September 2001.

AMR Corp. said it earned about $1 million in the July-September period — break-even on a per-share basis — on revenue of $4.60 billion. AMR lost $924 million in last year’s third quarter.

Excluding one-time gains and losses from downsizing, AMR said it would have lost $23 million or 15 cents per share in the most recent quarter. Analysts surveyed by Thomson First Call had expected a loss of 41 cents per share.

Despite the surprising results, AMR shares lost $1.24, or 8.3 percent, to $13.66 on the New York Stock Exchange.

The financial report marked a stunning turnaround for an airline that nearly filed for bankruptcy in April.

“We are making good progress under the focus and discipline of our four-point turnaround plan,” Chief Executive Gerard Arpey said in a statement issued by the company.

Mr. Arpey added, however, that the third quarter, which includes most of the summer vacation travel period, is a peak season for the airline industry, “and under normal circumstances, we should be doing much better at this time of year than simply breaking even.”

Mr. Arpey said the third-quarter results were “unmistakable evidence that we are building critical momentum” to cut costs.

The airline won cost concessions from unions and other employees in April that will eventually amount to $1.8 billion a year. The concessions included thousands of layoffs and reduced pay and benefits for remaining employees.

Those cuts produced savings of $400 million in the third quarter and are expected to total another $450 million in the fourth quarter, an AMR official said.

The $4.60 billion in revenue represented a 1.8 percent increase from a year earlier. American’s revenue per available seats multiplied by miles flown, a key measure in the airline industry, rose 8.1 percent. The airline reported a slight gain in revenue for each passenger mile traveled, the first such increase since early 2001.

At the same time, the carrier reported an 8.6 percent decline in per-passenger costs.

AMR has lost $6.4 billion since the beginning of 2001, when the economy weakened and business travel slumped.

Analysts said American benefited from better-than-expected demand for vacation travel over the summer, and they credited the airline’s cost-cutting moves.

“It’s the reduced costs that are bearing fruit,” said Ray Neidl, an analyst with Blaylock & Partners.

, an investment-banking firm.

“The big question mark now is how quickly they can get yields up,” Mr. Neidl said, using an industry term for revenue per passenger.

Before 2001, American made huge profits largely by charging high fares to business travelers unable to get low advance-purchase fares. In recent months, airlines have raised many fares but have not seen a major return of high-paying business travelers, many of whom now scour the Internet for cheaper fares.

Separately, American said yesterday it would keep open a maintenance base in Kansas City, Mo., after receiving $100 million in incentives from the city and the state of Missouri to upgrade the facility and help with asbestos abatement.

American had considered closing one of its three maintenance bases because it has cut the size of its fleet since late 2001. The others bases are in Fort Worth and Tulsa, Okla.


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