AMR Swings to 4th-Quarter Profit on Tax Benefit; Posts Annual Loss of $1.88 Billion

AMR Corp. (AAMRQ) swung to a fourth-quarter profit as the parent of American Airlines posted a net benefit of $350 million from an income tax benefit and the settlement of a commercial dispute.
Still the carrier posted an annual loss of $1.88 billion, mostly on a net $1.7 billion in reorganization-related and other charges, and expects that its first-quarter capacity will be 1.7% lower than during the year-earlier period.
AMR’s fourth-quarter results were hit by operational disruptions amid impacts from a flurry of pilot sick calls and maintenance issues as well as impacts from superstorm Sandy and an early November snowstorm in the Northeast.
The Fort Worth, Texas-based airline has been preparing to decide on whether to pursue a merger with US Airways Group Inc. (LCC) or to try to emerge from bankruptcy protection as an independent company.
With American’s financial performance improving and restructuring steps nearing completion, US Airways made a second merger proposal in mid-November that remains under discussion. A merger could create the largest U.S. airline by traffic, surpassing United Continental Holdings Inc. (UAL).
“Our momentum is growing toward emerging as a strong, healthy and vibrant competitor,” said AMR Chairman and Chief Executive Tom Horton. “In fact, with what we have accomplished, we expect to show strong results beginning in the first quarter of 2013.”
For the quarter, AMR reported a profit of $262 million, compared with a year-earlier loss of $1.1 billion. Excluding reorganization-related charges and other items, the adjusted loss was $88 million in the latest quarter, compared with an adjusted loss of $209 million a year earlier.
Revenue eased 0.3% to $5.94 billion amid declines in cargo and other revenue. Revenue was nearly flat at American Airlines and edged up 0.8% at regional affiliates.
Consolidated passenger traffic declined 0.3% in the quarter, while capacity was up 0.2%. Load factor–a measure of plane fullness–declined to 81% from 81.4%.
Consolidated passenger revenue per available seat mile was flat and consolidated passenger yield, representing average fares paid, increased 0.5%.
Fuel expenses, including hedging impacts, rose 6.6%. 
Source: Dow Jones

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