AMR Corporation (Dallas/Fort Worth), the parent company of American Airlines, Inc. (Dallas/Fort Worth), today reported a third quarter net profit of $110 million, excluding reorganization items and special charges – a $272 million improvement compared to the prior year period. In the third quarter of 2012, AMR incurred a net loss of $238 million compared to a net loss of $162 million in the same period of 2011.
AMR reported record third quarter consolidated revenue of $6.4 billion, up 0.8 percent compared to the prior year period, on 2.3 percent less capacity than in the third quarter of 2011. Consolidated passenger revenue per available seat mile (unit revenue) grew 4.3 percent compared to the third quarter of 2011, and mainline passenger unit revenue increased 4.5 percent.
- Consolidated passenger yield, representing average fares paid, increased 3.5 percent year-over-year in the third quarter of 2012, and mainline passenger yield increased 3.7 percent.
- Mainline capacity, or total available seat miles, in the third quarter of 2012 decreased 2.5 percent compared to the same period in 2011.
- American’s third quarter 2012 mainline load factor, or the percentage of total seats filled, was 85.5 percent – a record for any quarter in American’s history.
The company’s revenue performance was driven by year-over-year yield improvement and a record high consolidated load factor of 84.7 percent. Domestic unit revenue improved 3.8 percent in the third quarter versus the same period last year and, for the third consecutive quarter, the company saw unit revenue increases across all five of its hubs. Growth in yields on connecting traffic and increased load factors in the premium cabins contributed to the solid revenue performance in the Domestic entity.
International unit revenue increased 5.3 percent in the third quarter, driven by increased load factors across all entities, and improved yield performance. Unit revenue performance in the Pacific entity was strong, up 15.9 percent, driven by increased demand for the premium cabins and greater revenues from Asia point-of-sale. The Latin American entity posted a 4.0 percent unit revenue increase in the third quarter of 2012, including yield improvements in Mexico and Central and South America. The growing strength of American’s enhanced network, together with coordinated selling efforts with joint business partners British Airways and Iberia over the Atlantic, helped drive trans-Atlantic unit revenue improvement of 2.9 percent versus the prior year, despite slower sales around the Summer Olympics, and a weaker economic environment in Europe in the quarter.
The third quarter 2012 results include $348 million in special charges and reorganization items.
- Of that amount, $211 million is related to special charges, primarily associated with employee severance-related costs.
- The company recognized $137 million in reorganization items resulting from certain of its direct and indirect U.S. subsidiaries’ voluntary petitions for reorganization under Chapter 11 on Nov. 29, 2011. These items primarily result from estimated claims associated with restructuring the financing arrangements for certain aircraft and professional fees, offset by a pension curtailment credit for prior service costs.
In the third quarter, as part of the company’s fleet renewal efforts, American took delivery of seven Boeing 737-800s, for a total of 19 737s in the first nine months of the year, with another nine 737s scheduled to be delivered in the fourth quarter of 2012. These aircraft will improve the customer experience and provide a 35 percent reduction in fuel cost per seat versus MD-80 aircraft.
Furthermore, during the quarter, American announced plans to be the only airline to offer three-class service and the first to offer fully lie-flat First and Business Class seats on transcontinental flights with its Airbus A321 transcontinental aircraft. All new narrowbodies from the Airbus 320 family delivered beginning in the third quarter of 2013 and the Boeing 737-800 aircraft delivered beginning in the fourth quarter of 2013 are expected to offer in-seat entertainment, inflight Wi-Fi, individual 110-volt universal AC power outlets and USB jacks at every seat, in addition to Main Cabin Extra seating.
American is in the midst of a significant renewal and transformation of its fleet, including 59 aircraft slated for delivery in 2013. American is taking significant steps to improve its overall competitive position and expects to have the youngest and most fuel-efficient fleet among its U.S. airline peers by 2017.
In other news, American Airlines today announced plans to bring more than 1,500 new flight attendants onboard over the next year. American will begin the process of recruitment and hiring in November, with the first new-hire class beginning training in January 2013. The overwhelming response by current flight attendants to the company’s recent voluntary separation options, combined with an aggressive training schedule during the transition to the newly established flight attendant contract, led to the ability to welcome new flight attendants to American. This is an exciting step forward and an opportunity for American to look for candidates to join the current team and help deliver the best onboard experience and represent the new American.
Copyright Photo: Stephen Tornblom. Boeing 737-823 N820NN (msn 29559) arrives at New York (JFK).