AMR Corporation CEO Discusses Q3 2010 Results - Earnings Call Transcript

AMR Corporation CEO Discusses Q3 2010 Results - Earnings Call Transcript
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AMR Corporation (AMR)

Q3 2010 Earnings Conference Call

October 20, 2010 02:00 pm EST

Executives

Chris Ducey – Managing Director, Investor Relations

Gerard Arpey – Chairman and Chief Executive Officer

Tom Horton – President, AMR and American Airlines

Bella Goren – Senior Vice President, Chief Financial Officer

Analysts

Bill Greene - Morgan Stanley

Gary Chase – Barclays Capital

Michael Linenberg – Deutsche Bank

Hunter Keay – Stifel Nicolaus

Helane Becker – Dahlman Rose

Dan McKenzie – Hudson Securities

Jamie Baker – JPMorgan

Bob McAdoo - Avondale Partners

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the AMR third quarter 2010 earnings conference call. At this point, we do have all of your lines on a muted or listen-only mode. After the executive team’s presentation today, there will be opportunities for your questions. As a note, we will be taking questions first from the members of the analyst community and then after a short break, move in to our media Q&A session. As a reminder, today’s call is being recorded.

We are very pleased to have on the call with us today AMR Chairman and Chief Executive Officer, Gerard Arpey; the President AMR and American Airlines, Tom Horton; and Senior Vice President and Chief Financial Officer, Bella Goren. And here with our opening remarks is AMR Managing Director of Investor Relations, Chris Ducey. Please go ahead.

Chris Ducey

Thanks, operator and good afternoon, everyone. Before we begin the call I would like to point out that today’s call may contain forward-looking statements. These include our forecast of cost and revenue performance, fuel pricing and fuel hedging, capacity and traffic estimates, and other statements concerning our liquidity and our expectations of future performance. Today’s call will be concluded with a question-and-answer session and would like to ask the analysts to limit themselves to one question with a brief related follow up. And with that, I would like to turn the call over to our CEO, Gerard Arpey.

Gerard Arpey

Thank you, Chris. Good afternoon, everyone. As you have seen in our press release this morning, we reported a profit of $143 million for the third quarter, our first profit since the third quarter of 2007. Our results are substantially better than a year ago in spite of significantly higher fuel prices. If you exclude special items, our third quarter results are better by over $400 million versus the same period last year.

Obviously, we have a lot room for improvement but the fact that we generated our first profits since the third quarter of ’07 demonstrates a meaningful step forward, the progress we are making takes the dedication of our entire team and I would like to just take a moment and thank all of our employees for their efforts to serve our customers during a very busy summer as well as their ongoing efforts in what is shaping up to be a very busy fall as well.

In a few moments, Bella will walk through our results in more detail but first let me highlight a couple of developments. Today, we announced significant steps to bolster our already strong presence in Los Angeles. This plan is the next step in our cornerstone strategy which focuses our service in five key markets – New York, Chicago, Dallas-Fort-Worth, Miami and Los Angeles.

Next year, we will be increasing our service at LAX adding flights to Shanghai, China as well as to nine new markets in the US. By next summer, we expect American and American Eagle to offer 153 daily departures from Los Angeles with numerous connections to our own network and to our unmatched network of partners.

Our oneworld partners including American will offer 18 daily international departures to key markets including Sydney, Hong Kong and London, and beginning next April, Iberia will fly from LA to Madrid. In addition, we plan to expand our bilateral relationship with Alaska Airlines in Los Angeles offering customers the ability to purchase tickets to eight destinations in Mexico.

Earlier this month we launched our trans-Atlantic joint business with British Airways and Iberia.

As all of you know we have been working on this for longer than any of us would like to remember but on October 1, we were very pleased to actually get started. This has tremendous positive implications for both American and British Airways.

With the launch of the – enhanced our frequent flyer program, adding the ability for Advantage® members to earn and redeem frequent flyer miles on BA flights across the Atlantic something that was not possible before. We have also better aligned our frequent flyers programs in particular the benefits offered to our premium customers which they obviously value greatly.

We started code sharing on numerous additional routes on October 1. For example, British Airways added its code to over 2,000 American in Iberia flights serving 181 destinations and we have added the American Airlines code to over 320 BA and Iberia flights to 101 destinations. So in total the joint business combined network serves more than 400 destinations in 105 countries with about 5,200 flights and that is a powerful combined network we can now sell.

We have realigned our own schedules and expanded our service including announcing American Airline service to oneworld® partner hubs in Budapest, in Helsinki, new British Airways flights to San Diego as well as Iberia service to LA in 2011. New York and London are key markets for our business customers and indeed business customers all over the world and we plan to have 11 daily American and British Airways flights between Kennedy and Heathrow. Any flights will be much more evenly and conveniently spaced throughout the day. In fact, during the peak periods we are going to be in effectively operating a shadow between Kennedy and Heathrow so we are very excited about our plans for that markets next year.

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