Friday, July 22, 2011

AMR CORPORATION REPORTS SECOND QUARTER 2011 NET LOSS OF $286 MILLION

Fuel Price Increase of 31 Percent Year-Over-Year Drove $524 Million of Additional Expense

AMR Second Quarter 2011 Revenue Rose 8 Percent Compared to Same Period a Year Ago

FORT WORTH, Texas AMR Corporation, the parent company of American Airlines, Inc., today reported a net loss of $286 million for the second quarter of 2011, or $0.85 per share, compared to a net loss of $11 million, or $0.03 per share, in the second quarter of 2010.

The Companys second quarter performance was negatively impacted by fuel prices that increased 31 percent compared to the second quarter 2010. Including the impact of fuel hedging, AMR paid on average $3.12 per gallon for jet fuel in the second quarter of this year versus $2.37 per gallon in the second quarter 2010. As a result, the Company paid $524 million more for fuel in the second quarter 2011 than it would have paid at prevailing prices from the corresponding prior-year period.

"This past quarter was challenging in many respects," said AMR Chairman and CEO Gerard Arpey. "We remain acutely focused on taking the necessary steps to manage through our near-term challenges while continuing to lay the foundation for long-term success. We believe we have the right framework under our Flight Plan 2020 strategy to achieve our long-term objectives for the benefit of all our stakeholders, and today we took several major steps forward. I would also like to thank all of our employees for their efforts to serve our customers, particularly during the extreme weather conditions and tornadoes in April and May, and for their hard work and dedication during a very busy summer."

Arpey outlined several immediate actions the company is taking to be more competitive and efficient, including the following:

• American has adjusted its network for the fall, with the cancellation of its San Francisco to Honolulu and Los Angeles to San Salvador flights, as well as a number of other adjustments to reduce costs and improve revenue performance.
• In conjunction with Americans trans-Atlantic joint business partners, the company is evaluating its winter flying, and anticipates making seasonal route and day-of -week flying adjustments in early 2012 to improve its results.
• American announced today it intends to discontinue operating its reservations office in Dublin, Ireland, to reduce its operating costs.
• American also applied for a waiver from the U.S. Department of Transportation to temporarily suspend service from New Yorks JFK to Tokyos Haneda Airport through mid-2012. American plans to suspend its service to Haneda beginning in early September in an effort to help it offer service more in line with market demand, as Japan continues to recover from Marchs earthquake and tsunami.

AMR today announced landmark agreements with Boeing and Airbus that will enable it to transform Americans narrowbody fleet. These new aircraft will allow American to reduce its operating and fuel costs and deliver a broad range of state-of-the-art amenities to customers, while maximizing the Company's financial flexibility.

Under the new agreements, American will acquire 460 narrowbody aircraft from the Boeing 737 and Airbus A320 families beginning in 2013 -- the largest aircraft order in aviation history. As part of these agreements, starting in 2017 American will become the first U.S. network airline to begin taking delivery of "next generation" narrowbody aircraft that will further accelerate fuel-efficiency gains.

AMR announced today its intent to move forward with the divestiture of AMR Eagle Holding Corporation ("Eagle"). AMR currently expects the divestiture to take the form of a spin-off of Eagle stock to the shareholders of AMR. Strategically, AMR believes a divestiture would be beneficial, as it would help ensure American maintains competitive rates and services for its regional feed into the future. A divestiture would also provide Eagle an opportunity to vie for the business of other mainline carriers and allow the carrier to expand its operations.