Third Quarter 2009 Results Highlights
Gerard J. Arpey
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Thomas W. Horton
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AMR Corporation reported a net loss of $359 million for the third quarter of 2009. The results include the impact of approximately $94 million in non-recurring charges related to the sale of certain aircraft and the grounding of leased Airbus A300 aircraft prior to lease expiration. Excluding those non-recurring charges, the third quarter 2009 loss was $265 million.
While the weak economy and resulting impact on travel demand overwhelmed the benefit of lower fuel prices in the third quarter, the Company also noted that the actions it took during the past several months to strengthen its liquidity, network and fleet will better position it to meet its near-term challenges and achieve long-term success.
Network and Fleet Highlights
- Third quarter consolidated revenues of approximately $5.1 billion were more than 20 percent lower year over year; largely driven by reduced capacity and the reduced demand for air travel and cargo resulting from the global economic downturn.
- Other revenues (i.e. confirmed flight changes, baggage service charges) increased 1.4 percent to $585 million in the third quarter compared to the third quarter of 2008.
- Mainline capacity, or total available seat miles, in the third quarter decreased by 8.2 percent compared to the same period in 2008, as the Company continued to exercise capacity discipline given the difficult demand environment. Mainline unit revenue per available seat mile (unit revenue declined 14.5 percent in the third quarter compared to the year-ago period. The Company believes the strength of its network and its efforts to drive a revenue premium have helped its mainline unit revenue performance outpace that of several of its legacy network competitors throughout 2009.
- American’s mainline cost per available seat mile (unit cost) in the third quarter decreased by 13.5 percent year over year, due to lower fuel prices. Excluding fuel, mainline unit costs in the third quarter of 2009 increased by 7.2 percent year over year.
- Since the end of the second quarter, AMR completed a series of financing transactions to obtain approximately $5 billion in additional liquidity and new aircraft financing.
- AMR ended the third quarter with $4.6 billion in cash and short-term investments, including a restricted balance of $459 million.
Network enhancements designed to focus American’s presence in cornerstone cities and eliminate unprofitable flying in non-core markets were announced in the third quarter of 2009. AMR also continued to execute its fleet renewal plans and position itself to be successful over the long haul.
- AMR plans to add flights and destinations as well as focus its presence in Dallas/Fort Worth, Chicago, Miami, New York and Los Angeles while keeping 2010 capacity relatively flat.
- The company selected the GE’s GEnx-1B 74/75 engine for American’s expected Boeing 787 deliveries.
- American Eagle plans to add a First Class cabin to its fleet of 25 Bombardier CRJ700 regional jets and exercise options for the purchase of 22 additional CRJ700 aircraft for delivery beginning in the middle of 2010.
AMR continued to invest in its products and focus on customer service including:
- American’s “A+14” on-time performance was 78.5 percent during the third quarter of 2009, up 4.6 percentage points compared to the same period in 2008.
- American’s total number of aircraft installed with inflight internet is now on more than 165 planes, including Boeing 767-200s that are used for transcontinental service.
- AMR signed a letter of intent with HP to develop a next-generation Passenger Service System to enhance its customers’ travel experiences.
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