AMR posts improved $289 million net profit for quarter ended Sept. 30

By Caroline Salls

Pittsburgh, Oct. 17 - AMR Corp. reported a $289 million net profit for the quarter ended Sept. 30, a $527 million improvement over the same period of 2012, according to a company news release.

Net profit excluding reorganization and special items was $530 million, a $420 million improvement year-over-year. On that basis, AMR said the 2013 third quarter was the most profitable quarter in company history.

Revenue for the three months ended Sept. 30 was $6.8 billion, up 6.2% year-over-year, marking the highest quarterly revenue total in company history.

AMR said it ended the third quarter with $7.7 billion in cash and short-term investments, including restricted cash, compared to a balance of $5.1 billion at the end of the third quarter of 2012.

According to the release, AMR subsidiary American Airlines accrued $59 million in employee profit sharing in the quarter and has accrued a total of $65 million for employee profit sharing this year. The company said the anticipated distribution would be the first profit sharing payout in 13 years.

"Continued execution on our product, network and alliance strategy, combined with cost efficiencies from restructuring and fleet renewal, creates strong momentum toward our planned merger with US Airways," AMR chairman, president and chief executive officer Tom Horton said in the release.

Margin expansion

AMR said it continued to drive profitability and significant margin expansion in the third quarter, achieving a pre-tax margin of 7.8%, excluding reorganization and special items, an improvement of 6.1 points over the same period of 2012, and a GAAP pre-tax margin of 4.2%, an improvement of 7.9 points compared to the third quarter of 2012.

On a trailing 12-month basis, the third quarter marked AMR's seventh consecutive quarter of improved pre-tax margins. The company said this margin expansion is driven by the realization of restructuring efforts to improve the operational and financial performance of the company, and AMR expects to realize additional improvements as the company continues to implement new terms reached with vendors and suppliers.

Looking ahead

AMR said it also expects results going forward to be bolstered as it competes more effectively by better matching aircraft size with demand through the continued deployment of the new Airbus A319 narrowbodies and the new two-class large regional jets, both of which started entering into service in the third quarter.

"In addition, our financing activities have significantly enhanced our liquidity and are enabling us to pay down high-interest debt and efficiently fund our impending emergence from the restructuring process," AMR chief financial officer Bella Goren said in the release.

Reorganization, special items

The company said its third-quarter results include the impact of $241 million in reorganization and special items.

Of that amount, AMR recognized a $151 million loss in reorganization items resulting from the filing of Chapter 11 cases by some of its direct and indirect U.S. subsidiaries on Nov. 29, 2011, primarily consisting of professional fees, as well as allowed and estimated allowed claim amounts.

In conjunction with the repayment of the existing financings, the company incurred cash charges of $19 million, included in interest expense, and a charge of $54 million related to the premium on tender for existing financings and to the write-off of unamortized issuance costs.

The company's results for the third quarter also include special charges and merger-related expenses of $15 million.

AMR Corp., the Fort Worth-based parent of American Airlines, filed for bankruptcy on Nov. 29, 2011 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 11-15463.

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