AMR CFO: Our Bankruptcy Is 'Most Efficient' of Any Airline's
DALLAS (TheStreet) -- AMR (AAMRQ.PK) Chief Financial Officer Bella Goren said the carrier's 13 months in bankruptcy has enabled "the most efficient restructuring process" in recent airline history as the carrier reported record full-year revenue and a fourth-quarter profit improvement excluding items.
The assessment is based on "how much we've been able to achieve in just 13 months and the remarkable impact we've had on the bottom line," Goren said in an interview Wednesday morning. "If you see what we've been able to accomplish in 13 months, that will speak for itself. We are now in a position to lead again (which) considering where we were in 2011, is truly an amazing achievement."
Goren shied away from any discussion of a potential merger with US Airways (LCC), which JP Morgan analyst Jamie Baker said Tuesday "may be imminent." But Goren spoke repeatedly of American's potential to make additional improvements in the current year.
"We expect our performance to continue improving," she said. "Many cost initiatives and operating flexibilities will ramp up in 2013." She said many of the restructuring items were implemented late in the year.In the fourth quarter, excluding one-time items, the carrier reported a loss of $88 million, compared with a loss of $209 million in the same quarter a year earlier. Revenue declined 0.3% to $5.9 billion. Including items, American had a fourth-quarter net profit of $262 million compared to a net loss of $1.1 billion in the fourth quarter of 2011. The figure includes $350 million of net positive reorganization and special items as well as $142 million for the cumulative negative impact of Hurricane Sandy, a November snow storm and lost bookings due to an earlier pilot job. Consolidated passenger revenue per available seat mile was flat while mainline PRASM fell 0.4%. American said PRASM would have gained 2% but for the one-time impact of weather and lost bookings. On the cost side, consolidated fourth-quarter cost per available seat mile declined 8.9% excluding fuel and special items. For the full year, excluding items, AMR lost $130 million, a $932 million improvement over 2011. The company's operating profit, excluding special items, was $494 million, representing a $749 million improvement from a year earlier. Revenue rose 3.7% to $24.9 billion, highest in company history, on 1% less capacity. Including items, the 2012 loss was $1.9 billion, compared to 2011's full-year loss of $2.0 billion. The one-time items include $1.7 billion of net negative reorganization and special items. Full-year passenger revenue per available seat mile rose 5.8% including a 5.6% mainline increase, as consolidated yield rose 4.6%. Mainline and consolidated PRASM of 13.3 cents and 12.28 cents and consolidated load factor of 82% and consolidated yield of 15.85 cents were all records for any year in its history, AMR said. During the year, American reported labor cost reductions of 17%, including management, independent and unionized work groups. It renegotiated financing for more than 400 aircraft, for more than 95% of its 725 facility leases and for more than 9,000 vendor and supplier agreements. Fourth-quarter cost savings related to restructuring totaled about $400 million, the company said. "We've been able to reach the vast majority of our restructuring milestones," Goren said. When it filed for bankruptcy protection in November 2011, AMR said that it expected annual savings of $2 billion and annual revenue enhancements of $1 billion. American ended the fourth quarter with about $4.7 billion in cash and short-term investments, the same amount as it reported at the end of 2011.
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