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American Airlines Group reports a record 4Q GAAP net profit of $597 million and a 2014 GAAP net profit of $2.9 billion

American Airlines Group Inc. (American Airlines and US Airways) (Dallas/Fort Worth) reported its fourth quarter and full year 2014 results.

For the fourth quarter 2014, American Airlines Group reported a record GAAP net profit of $597 million. This compares to a GAAP net loss of $2.0 billion in the fourth quarter 2013, which includes the results for US Airways only for the period from the completion of the merger on December 9, 2013, through December 31, 2013.

For full year 2014, GAAP net profit was $2.9 billion, compared to a full year 2013 GAAP net loss of $1.8 billion for AMR Corporation, which includes the results for US Airways only for the period from the completion of the merger on December 9, 2013, through December 31, of 2013.

The Company believes it is more meaningful to compare year-over-year results for American Airlines and US Airways excluding special charges and on a combined basis, which is a non-GAAP formulation that combines the results for AMR Corporation and US Airways Group. On this basis, the Company’s fourth quarter 2014 net profit excluding net special charges was a record $1.1 billion, or $1.52 per diluted share. This represents a 153 percent improvement over the combined non-GAAP net profit of $436 million excluding net special charges for the same period in 2013. The Company’s fourth quarter 2014 pretax margin excluding net special charges was a record 10.6 percent.

Excluding net special charges, the Company’s 2014 net profit was a record $4.2 billion, or $5.70 per diluted share. This represents a 115 percent improvement over the Company’s combined 2013 non-GAAP net profit excluding net special charges of $1.9 billion.

“Our record 2014 results close out a fantastic first year for our merger. These results would not have been possible without the efforts of our more than 100,000 team members,” said Doug Parker, American Airlines Group Chairman and CEO. “They have done a great job of working together to take care of our customers and restore American as the greatest airline in the world.

“We have much to do in the year ahead as we continue to integrate two large carriers. The results we have achieved thus far, combined with our economic outlook, give us confidence that 2015 will be another outstanding year for American Airlines.”

Revenue and Cost Comparisons

Total revenue in the fourth quarter was a record $10.2 billion, an increase of 2.1 percent versus the fourth quarter 2013 on a combined basis and excluding special items, on a 1.7 percent increase in total available seat miles (ASMs). Consolidated passenger revenue per ASM (PRASM) was 13.50 cents, down 1.0 percent versus the fourth quarter 2013 on a combined basis. Consolidated passenger yield was a record 16.84 cents, up 0.9 percent year-over-year.

Strong demand throughout the year led to 2014 total revenue of $42.7 billion, up 5.6 percent versus 2013 on a combined basis and excluding special items. Full year consolidated PRASM was 13.97 cents, up 2.2 percent versus 2013 on a combined basis.

Total operating expenses in the fourth quarter were $9.3 billion, a decrease of 4.1 percent compared to combined fourth quarter 2013 due primarily to a 17.3 percent decrease in consolidated fuel expense. Fourth quarter mainline cost per available seat mile (CASM) was 13.32 cents, down 6.1 percent on a 1.5 percent increase in mainline ASMs versus combined fourth quarter 2013. Excluding special charges and fuel, mainline CASM was 8.67 cents, up 1.1 percent compared to the combined fourth quarter 2013. Regional CASM excluding special charges and fuel was 15.87 cents, up 0.9 percent on a 3.8 percent increase in regional ASMs versus combined fourth quarter 2013.

For the full year 2014, total operating expenses were $38.4 billion, up 1.5 percent versus combined 2013. Excluding special charges and fuel, mainline CASM increased 2.0 percent to 8.63 cents versus combined 2013. Regional CASM excluding special items and fuel increased 3.6 percent to 15.94 cents versus combined 2013.

Liquidity

At December 31, 2014, American had approximately $8.1 billion in total cash and short-term investments, of which $774 million was restricted. The Company also had an undrawn revolving credit facility of $1.8 billion.

Also in the fourth quarter, the Company returned $959 million to its shareholders through the payment of $72 million in quarterly dividends and the repurchase of $887 million of common stock, or 20.5 million shares. When combined with the $113 million of shares repurchased in the third quarter 2014, the Company repurchased a total of 23.4 million shares at an average price of $42.72 per share in 2014.The Company’s $1 billion share repurchase program announced in July 2014 is now complete – more than one year ahead of its scheduled expiration. The Company also purchased approximately 52,000 shares from its Disputed Claims Reserve at the prevailing market price to satisfy certain tax obligations resulting from the November 4, 2014, distribution.

As of December 31, 2014, approximately $656 million of the Company’s unrestricted cash and short-term investment balance was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0 bolivars, with the rate depending on the date the Company submitted its repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system. The Company’s cash balance held in Venezuelan bolivars decreased $65 million from the September 30, 2014 balance of $721 million. In the fourth quarter of 2014, the Company incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for one of its 2012 repatriation requests originally valued at a rate of 4.3 bolivars to the dollar. Accordingly, the Company revalued its remaining pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total, the Company recognized a $30 million special charge for these foreign currency losses in the fourth quarter of 2014.

The Company has significantly reduced capacity in this market. The Company is continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. The Company is monitoring this situation closely and continues to evaluate its holdings of Venezuelan bolivars for additional foreign currency losses, which could be material.

The Company also announced that its Board of Directors declared a dividend of $0.10 per share for shareholders of record as of February 9, 2015. The dividend will be paid on February 23, 2015. In addition, the Company announced that its Board also authorized an additional $2 billion share repurchase program to be completed by the end of 2016.

Shares repurchased under the program announced above may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The program does not obligate the Company to repurchase any specific number of shares or continue a dividend for any fixed period, and may be suspended at any time at management’s discretion.

In the fourth quarter, the Company recognized $507 million in net special charges, including:

$280 million in merger integration related expenses
$116 million in net charges for bankruptcy related items, principally consisting of fair value adjustments for bankruptcy settlement obligations
$70 million in charges related primarily to certain asset impairments
$31 million in non-operating special items primarily relating to a $30 million special charge for foreign currency losses relating to the Company’s cash balance held in Venezuelan bolivars
$16 million in net regional operating special items including a $24 million charge relating to a new pilot contract, partially offset by an $8 million gain on the sale of certain spare parts
$6 million in non-cash deferred income tax benefits relating to certain indefinite lived intangible assets

Copyright Photo: Brian McDonough/AirlinersGallery.com. Boeing 757-223 WL N185AN (msn 32379) approaches the runway at Miami International Airport (MIA).

American Airlines aircraft slide show (current livery):

American counters Delta’s Philadelphia announcement, will start daytime Philadelphia-London Heathrow flights

American Airlines (Dallas/Fort Worth) on the heels of the Delta PHL-LHR announcement, has announced it will start new daily daytime service from Philadelphia International Airport (PHL) to London Heathrow Airport (LHR) on March 29, 2015.

The new flight complements American’s existing overnight PHL-LHR service.

The new flight will be operated with a US Airways Boeing 757-200 on the following schedule:

PHL–LHR (all times local)
Departs PHL at 9:55 a.m.
Arrives at LHR at 10:10 p.m.

Departs LHR at 8:20 a.m.
Arrives at PHL at 11:35 a.m.

American’s PHL-LHR service will continue to be operated as part of the airline’s joint business agreement with fellow oneworld® member British Airways. Together, the two airlines offer customers four daily flights year-round between Philadelphia and London. From London, American’s customers have access to more than 70 destinations in Europe on British Airways.

The largest airline in the world also is the airline with the most extensive network out of Philadelphia.

American offers more than 475 daily flights to 124 destinations from its PHL hub.

Copyright Photo: Michael Kelly/AirlinersGallery.com. American’s Boeing 757-223 N174AA (msn 31308) in the oneworld livery departs from Dublin.

American Airlines (current livery) aircraft slide show:

American Airlines-US Airways aircraft slide show:

American Airlines (classic liveries) aircraft slide show:

American Airlines to add two new Boeing 757 routes from New York JFK next summer to Birmingham and Edinburgh

American Airlines (Dallas/Fort Worth) is adding two Boeing 757-200 summer seasonal routes from New York (JFK) to both Birmingham and Edinburgh in the United Kingdom on May 7, 2015. Both routes will be operated on a daily basis.

Update: American formally announced the new Birmingham flights on November 3 with this statement:

American Airlines customers will soon have access to a new destination when Birmingham, England (BHX) joins the network of the world’s largest airline.

New daily service from New York’s John F. Kennedy International (JFK) is scheduled to begin May 7 with a Boeing 757. Customers may begin booking travel on these flights now. Birmingham will be American’s fifth destination in the United Kingdom.

Flights leave JFK at 7 p.m. (1900) daily, arriving in Birmingham at 7:10 a.m. (0710). Flights from Birmingham will depart at 10 a.m. (1000), arriving at JFK at 12:55 p.m. (1255).

As previously reported, American is restoring the Miami-Frankfurt route on May 14, 2015 with Boeing 767-300s.

In other news, American will end Dallas/Fort Worth-Rio de Janeiro service on February 21, 2015 per Airline Route.

Copyright Photo: Fred Freketic/AirlinersGallery.com. American’s Boeing 757-223 N187AN (msn 32381) arrives in New York (JFK).

American Airlines:

American Airlines Group to repaint the American and US Airways Boeing 757 fleets

American Airlines Group (American Airlines and US Airways) (Dallas/Fort Worth) has informed its employees about the repainting of the American Airlines and US Airways fleets into the 2013 American brand.

In the June 26 issue of Arrivals, the employees were briefed on the repainting process.

Highlights: As expected, the aging fleet of McDonnell Douglas DC-9-82s (MD-82s) and DC-9-83s (MD-83s) of American will not be repainted. This type is being phased out and will be gone in 2018. However the AAG has made the decision to repaint the 35 Boeing 757-200s of American and the 16 Boeing 757-200s of US Airways into the new livery. So far none have been repainted. We are likely to start seeing some soon, especially at US Airways. All will be repainted by the fourth quarter of 2016.

All of the American 777-200s have now been repainted (above).

US Airways has started repainting the Airbus A320 family aircraft: 700, 701, 702, 703, 809, 814, 819, and one other have been repainted. 579, 580, and 581 were all delivered new in American colors. The first Airbus aircraft to be repainted were the former Star Alliance liveried aircraft.

All new arrivals for both American and US Airways are of course, painted in the new American look.

We are likely to still see the American 1968 classic livery lingering on until the fourth quarter of 2017. The American Boeing 737-800s will be the last type to be fully repainted.

Here is the graph sent to the employees:

Top Copyright Photo: Jay Selman/AirlinersGallery.com. All of the Triple Sevens have been repainted. Boeing 777-223 ER N790AN (msn 30251) arrives in New York (JFK).

American Airlines (current livery):

American Airlines (historic liveries):

US Airways:

Video: Painting a Boeing 777:

Middle Copyright Photo: Bruce Drum/AirlinersGallery.com. American currently operates 35 Boeing 757-200s as the type is gradually being retired. Boeing 757-223 N624AA (msn 24582) of American Airlines taxies to the gate at the Miami hub painted in the classic 1968 livery.

Bottom Copyright Photo: Stefan Sjogren/AirlinersGallery.com. US Airways is now down to just 16 Boeing 757-200s. Boeing 757-2B7 N938UW (msn 27246) prepares to land in Stockholm (Arlanda).

Icelandair Group and its pilots agree to keep talking until September 30, avoiding any further strikes

Icelandair Group (Icelandair) (Keflavik) has signed an agreement with the Icelandic Airline Pilots Association (FIA) for a temporary wage agreement through September 30, 2014. As previously reported, The Icelandic parliament on May 16 prohibited any strikes by the Icelandair pilots. The union had planned to strike on nine days between May 9 and June 3. The group issued this statement:

Icelandair Group and the Icelandic Airline Pilots Association (FIA) signed a wage agreement that is valid until September 30, 2014.

Over the term of the agreement, Icelandair Group and FIA will jointly work towards a long term agreement. The agreement is in broad terms in line with agreements already signed on the Icelandic labor market this year. The agreement will now be presented by FIA to its members that will vote
electronically on the agreement in the next seven days.

At this time is not possible to estimate Icelandair Group’s loss due to FIA’s actions during this industrial dispute.

Copyright Photo: TMK Photography/AirlinersGallery.com. Former American Airlines Boeing 757-223 TF-ISF (msn 24595) approaches the runway at Toronto’s Pearson International Airport (YYZ).

Icelandair:

Icelandair is coming to Edmonton, Vancouver and Geneva in 2014

Icelandair (Keflavik) has announced a major expansion for 2014 and is adding three new destinations, namely Edmonton and Vancouver in Canada and Geneva in Switzerland. The airline is also adding three additional Boeing 757s. The flag carrier issued this statement:

The Icelandair schedule for 2014 is the biggest in the company‘s history, increasing by 18% from this year. Three new destinations will be added and frequency increased to several cities in North-America and Europe. Number of passengers is estimated at over 2.6 million in 2014, compared to just under 2.3 million this year. In 2014, three Boeing 757 aircraft will be added to the fleet, enlarging it from 18 to 21 aircraft.

Icelandair has seen strong organic growth in the past few years and the 2014 schedule is double in size compared to the one in 2009. Departures from Iceland have grown from 4.500 in 2009 up to 9000 next year, and passenger numbers in 2009 were 1.3 million or half of next year’s estimate.

Besides opening up routes to Edmonton, Vancouver and Geneva, Icelandair will add frequency to most of its current destinations. 21 weekly flights will be added on European routes and 14 weekly flights to North America or 35 flights in total, from 220 weekly departures from Iceland this year to 254 departures next summer.

Flights to Edmonton, capital of Alberta, will start on March 26, 2014 and continue until January 2015, four times a week. The Edmonton economy is strong with the 1.2 million inhabitants.

The Vancouver twice-weekly flights start on May 13, 2014 and continue until October 12, 2014. Vancouver, western Canada‘s largest city with a population of 2.3 million.

The Geneva service starts on May 24, 2014 and continues twice-weekly until September 23, 2014. Geneva is an historic city and center for many international organizations with a multinational population of 1,1 million situated close to the French border.

Copyright Photo: Andi Hiltl/AirlinersGallery.com. Formerly operated by American Airlines as N637AM, Boeing 757-223 TF-ISF (msn 24595) joined the Icelandair fleet on January 9, 2013. TF-ISF is seen departing from Zurich today (September 3).

Icelandair:

American to start DFW-Barbados flights

American Airlines Boeing 757-223 WL N690AA (msn 25696) (Flagship Freedom) IAD (Brian McDonough), originally uploaded by Airliners Gallery.

American Airlines (Dallas/Fort Worth) is planning to add nonstop flights to Barbados from its Dallas- Fort Worth (DFW) hub three times per week service beginning on December 16. Currently the airline provides daily nonstop service from New York-JFK and Miami International Airport.

The flight will be operated with Boeing 757 aircraft with 22 seats in Business Class and 166 in the Coach cabin.

Copyright Photo: Brian McDonough. Boeing 757-223 N690AA (msn 25696), “Flagship Freedom”, prepares to land at Washington (Dulles).

AMR Corporation reports a wider 1Q 2010 Net Loss of $505 Million

American Airlines Boeing 757-223 WL N690AA (msn 25696) (Flagship Freedom) IAD (Brian McDonough), originally uploaded by Airliners Gallery.

AMR Corporation (Dallas/Fort Worth), the parent company of American Airlines and American Eagle Airlines, reported a net loss of $505 million for the first quarter of 2010, or $1.52 per share. The results include the impact of a $53 million, or $.16 per share, special item related to the devaluation of the Venezuelan currency in January. Excluding that special item, AMR lost $452 million, or $1.36 per share, in the first quarter.

This compares to a net loss of $375 million, or $1.35 per share, in the first quarter of 2009. The first quarter 2009 results included a $13 million charge, or $0.05 per share, related to A300 aircraft retirements during that quarter. Excluding that special item, AMR lost $362 million, or $1.30 per share, in the first quarter of 2009.

Copyright Photo: Brian McDonough. American’s Boeing 757-223 N690AA (msn 25696) is pictured on final approach at Washington (Dulles). It displays the special “Flagship Freedom” scheme.