AMR Corporation (AM R )

Q2 2010 Earnings Call Transcript

July 21, 2010 2:00 pm ET


Chris Ducey – Managing Director, IR

Gerard Arpey – Chairman and CEO

Tom Horton – President, AMR and American Airlines


Gary Chase – Barclays Capital

Michael Linenberg – Deutsche Bank

Kevin Crissey – UBS

Mark Streeter – JP Morgan

Glenn Engel – Banc of America/Merrill Lynch

Will Randow – Citigroup

Hunter Keay – Stifel Nicolaus

Jamie Baker – JP Morgan



Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the AMR second 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 and President AMR and American Airlines, Tom Horton. And here are the opening remarks as AMR Managing Director of Investor Relations, Chris Ducey. Please go ahead.

Chris Ducey

Thank you. Good afternoon, everyone. Thank you for joining us for today’s AMR earnings call. During the call, Gerard Arpey will provide an overview of our performance and outlook and then Tom Horton will provide details regarding our earnings for the second quarter along with some perspective on the third quarter and the remainder of 2010. After that, we’ll be happy to take your questions. In the interest of time, please limit your questions to one with a follow up.

Our earnings release earlier today contains highlights of our financial results for the quarter. This release continues to provide additional information regarding entity performance and cost guidance which should assist you in having accurate information about our performance and outlook.

In addition, the earnings release contains reconciliations of any non-GAAP financial measurements that we may discuss. This release, along with the webcast of today’s call, is available on the investor relations section of Finally, let me note that many of our comments today, including statements regarding our outlook for revenue and cost, forecasts of capacity, traffic, load factor, fuel costs, fleet plans and statements regarding our plans and expectations, including our expectations of the benefits of alliance activities and our expectations regarding industry labor costs will constitute forward-looking statements.

These matters are subject to a number of factors that could cause actual results to differ from our expectations. These factors include changes in economic, business and financial conditions, high fuel prices and other factors referred to in our SEC filings, including our 2009 annual report on Form 10-K. And with that, I’ll turn the call over to Gerard.

Gerard Arpey

Okay. Thank you, Chris. Good afternoon, everyone. As you have seen in our press release this morning, we reported a significant adjustment in our second quarter financial results both year-over-year and compared with last quarter. In spite of fuel prices that were much higher than a year ago, we substantially reduced our net loss to about breakeven compared with the net loss of $390 million in the same period last year.

This represents an improvement of about $380 million versus a year ago and is nearly $0.5 billion better than our first quarter results. Clearly, though, there is a lot more work to do but the fact that we generated our first operating profit since the third quarter of 2007 demonstrates considerable progress and indicates that we are headed in the right direction. Tom will walk you through our results in more detail in a few moments but first let me highlight several key developments that will position us for continued progress.

Today, as you’ve seen, we announced several changes to our senior management team as we position our company to capitalize on the momentum of receiving antitrust immunity across the Atlantic and in anticipation of similar immunity in the Pacific. I’m very pleased to say that Tom Horton has been promoted to President of American Airlines. With his expanded responsibilities, Tom will oversee the finance, planning, sales and marketing, customer service and information technology organizations in our company.

There are several other officer changes as well which you can read about in the press release but suffice it to say we have an opportunity to create great benefits for our customers, opportunities for our front line people and value for our shareholders. And we are realigning and consolidating our internal resources to make sure we do just that.

I think all of you know that Tom and I have worked together for many, many years and since recruiting him back to American from AT&T in 2006, he has been instrumental in helping us navigate through some of the most difficult times in our history and positioning us well for the future. So, I’m really excited to continue working with him and the strong team that we have assembled to support him and again you can read all about that in the press release.

But I would like to mention that one of those key support members is Bella Goren, who is also joining us today and of course all of you remember Bella from her IR days, but she has been quite busy on the marketing side of the company since then. And I know you’ll all be looking forward to working closely with Bella again.

As I just referenced, within the last week we obtained clearance from the European Commission and approval by the Department of Transportation respectively for antitrust immunity with British Airways, Iberia, Royal Jordanian and Finnair as well as our plans to operate a trans-Atlantic joint business with British Airways and Iberia.

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