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| AMR Corporation Reports a First Quarter 2009 Net Loss of $375 Million as Weak Economy Hurts Revenue |
DESPITE CHALLENGES, AIRLINE CONTINUES ITS FOCUS ON IMPROVEMENTS IN AREAS WITHIN ITS CONTROL:
- Adds nearly
- Unit cost results for first quarter 2009 and full-year outlook both
better than - Customer dependability metrics continue to improve - The current quarter results compare to a net loss of "While lower fuel prices have provided a significant buffer against
falling demand in 2009, the struggling economy and capital markets remain
significant challenges for American and the rest of the industry," said AMR
Chairman and CEO Among accomplishments so far in 2009, Arpey noted that the Company was
able to obtain nearly Arpey added, "Thanks in large part to the efforts of our employees, we also continued to improve our customer dependability. Our 2009 outlook remains challenging, but the hard work we have done in recent years to bolster liquidity, reduce debt and operate with capacity discipline has better prepared us to face these difficulties." Progress Continues in 2009 In the first quarter, American took delivery of two new AMR today announced that it has received a new financing commitment covering two 737s included in its expected deliveries. With this new financing, along with a backstop financing commitment, as well as a sale-leaseback transaction covering 20 737s, subject to certain terms and conditions, AMR has obtained financing commitments covering its new 737 deliveries well into the fourth quarter of 2010. In addition, AMR continued efforts to improve its cash position through an
aircraft-secured debt transaction that raised nearly Arpey also noted the Company's continued efforts to contain unit costs.
Excluding the cost of fuel and the impact of special items, American's
mainline and consolidated cost per available seat mile in the first quarter
were each approximately three and a half percentage points lower than the
Company's forecast in guidance provided on The Company's investments aimed at improving dependability and the
customer experience also continued to bear fruit in the first quarter.
American's "A+14" on-time performance, as measured by the Arpey reiterated expectations that American and four of its fellow
oneworld members - Financial and Operational Performance (Excluding impact of special items) AMR reported first quarter consolidated revenues of approximately Other revenues, including sales from such sources as confirmed flight
changes, purchased upgrades, Buy-on-Board food services, and bag fees,
increased 6.9 percent year over year to American's mainline passenger revenue per available seat mile (unit revenue) declined by 8.7 percent in the first quarter compared to the year-ago quarter. Mainline capacity, or total available seat miles, in the first quarter decreased by 8.0 percent compared to the same period in 2008, as the Company continued to exercise capacity discipline given the difficult demand environment. American's mainline load factor - or the percentage of total seats filled - was 75.7 percent during the first quarter, compared to 79.1 percent in the first quarter of 2008. American's first-quarter yield, which represents average fares paid, decreased by 4.5 percent compared to the first quarter of 2008, its first year-over-year yield decrease following 15 consecutive quarters of year-over-year yield increases. The decrease in yield was largely due to more aggressive pricing industrywide and reduced traffic in the premium cabins. American's mainline cost per available seat mile (unit cost) in the first
quarter decreased by 6.8 percent year over year. The largest contributor to
this year-over-year decrease was fuel. Taking into account the impact of fuel
hedging, AMR paid Excluding fuel, mainline unit costs in the first quarter of 2009 increased by 6.8 percent year over year. Factors driving the first quarter increase in unit costs, excluding the impact of fuel, include unit cost pressure associated with 2009 capacity reductions, including increased facility and landing fees; dependability initiatives; increased defined benefit pension expenses and employee and retiree medical expenses; and increased materials and repair costs. These unit cost pressures were somewhat offset by reduced passenger and cargo variable expenses and foreign exchange effects, and further mitigated by improved cost discipline on information technology and materials and repair expenses. Balance Sheet Update Including the new financing of nearly AMR's Total Debt, which it defines as the aggregate of its long-term debt,
capital lease obligations, the principal amount of airport facility tax-exempt
bonds, and the present value of aircraft operating lease obligations, was
In addition to its estimated
First Quarter Highlights
-- American said it is taking its Wi-Fi internet service out of the trial
stage and has decided to install Gogo(R) Inflight Internet on more
than 300 domestic aircraft over the next two years. The expansion will
help American, which last August became the first U.S. airline to
launch the Gogo service, further enhance its customers' travel
experience and meet their evolving travel needs.
-- American announced that it has begun extensive renovations to its
Admirals Club and Flagship Lounge at
Mainline and Consolidated Capacity AMR expects its full-year mainline capacity to decrease by approximately 6.5 percent in 2009 compared to 2008, with a reduction of domestic capacity of approximately 9 percent and a reduction of international capacity of approximately 2.5 percent compared to 2008 levels. On a consolidated basis, AMR expects full-year capacity to decrease by more than 6.5 percent in 2009 compared to 2008. AMR expects mainline capacity in the second quarter of 2009 to decrease by more than 7.5 percent compared to the second quarter of 2008, with domestic capacity expected to decline by approximately 11 percent and international capacity expected to decline by more than 2 percent compared to second quarter 2008 levels. AMR expects consolidated capacity in the second quarter of 2009 to decrease by approximately 8 percent compared to the second quarter of 2008. AMR expects regional affiliate capacity to decline by approximately 11 percent in the second quarter of 2009 compared to the prior-year period and expects full-year regional affiliate capacity to decline by approximately 8 percent in 2009 compared to 2008 levels. Fuel Expense and Hedging While the cost of jet fuel remains very volatile, AMR is planning for an
average system price of Mainline and Consolidated Unit Costs (Excluding impact of special items) For the second quarter of 2009, mainline unit costs are expected to decrease by 11.5 percent compared to the second quarter of 2008, while second quarter consolidated unit costs are expected to decrease by 12.0 percent compared to the second quarter of 2008. In the second quarter of 2009, mainline unit costs excluding fuel are expected to increase 7.7 percent year over year while consolidated unit costs excluding fuel are expected to increase 6.1 percent compared to the second quarter of 2008. Full-year mainline unit costs are expected to decrease 10.4 percent in
2009 compared to 2008, while full-year consolidated unit costs are expected to
decrease 10.7 percent in 2009 compared to 2008. (This compares to the forecast
provided on AMR expects mainline unit costs excluding fuel to be 6.6 percent higher in
2009 versus 2008, while 2009 consolidated unit costs excluding fuel are
expected to increase 5.3 percent year over year. (This compares to the
forecast provided on In addition to the impact of reduced variable expenses from less passenger and cargo traffic, 2009 unit costs are expected to improve versus prior guidance due to lower costs on items such as information technology spending and consulting fees and the implementation of a hiring and pay freeze for all non-contract employees. Editor's Note: AMR's Chairman and Chief Executive Officer, Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals are forward-looking statements. Forward-looking statements include, without limitation, the Company's expectations concerning operations and financial conditions, including changes in capacity, revenues and costs; future financing plans and needs; the amounts of its unencumbered assets and other sources of liquidity; fleet plans; overall economic and industry conditions; plans and objectives for future operations; regulatory approvals and actions, including the Company's application for antitrust immunity with other oneworld alliance members; and the impact on the Company of its results of operations in recent years and the sufficiency of its financial resources to absorb that impact. Other forward-looking statements include statements which do not relate solely to historical facts, such as, without limitation, statements which discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Guidance given in this release regarding capacity, fuel consumption, fuel prices, fuel hedging, and unit costs, and statements regarding expectations of regulatory approval of the Company's application for antitrust immunity with other oneworld members, are forward-looking statements. Forward-looking statements are subject to a number of factors that could
cause the Company's actual results to differ materially from the Company's
expectations. The following factors, in addition to other possible factors
not listed, could cause the Company's actual results to differ materially from
those expressed in forward-looking statements: the materially weakened
financial condition of the Company, resulting from its significant losses in
recent years; weaker demand for air travel and lower investment asset returns
resulting from the severe global economic downturn; the Company's need to
raise substantial additional funds and its ability to do so on acceptable
terms; the ability of the Company to generate additional revenues and reduce
its costs; continued high and volatile fuel prices and further increases in
the price of fuel, and the availability of fuel; the Company's substantial
indebtedness and other obligations; the ability of the Company to satisfy
existing financial or other covenants in certain of its credit agreements;
changes in economic and other conditions beyond the Company's control, and the
volatile results of the Company's operations; the fiercely and increasingly
competitive business environment faced by the Company; potential industry
consolidation and alliance changes; competition with reorganized carriers; low
fare levels by historical standards and the Company's reduced pricing power;
changes in the Company's corporate or business strategy; government regulation
of the Company's business; conflicts overseas or terrorist attacks;
uncertainties with respect to the Company's international operations;
outbreaks of a disease (such as SARS or avian flu) that affects travel
behavior; labor costs that are higher than those of the Company's competitors;
uncertainties with respect to the Company's relationships with unionized and
other employee work groups; increased insurance costs and potential reductions
of available insurance coverage; the Company's ability to retain key
management personnel; potential failures or disruptions of the Company's
computer, communications or other technology systems; losses and adverse
publicity resulting from any accident involving our aircraft; changes in the
price of the Company's common stock; and the ability of the Company to reach
acceptable agreements with third parties. Additional information concerning
these and other factors is contained in the Company's Detailed financial information follows:
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(as reclassified)
(in millions, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
------------------ Percent
2009 2008 Change
---------- ------- ---------
Revenues
Passenger - American Airlines $3,680 $4,379 (16.0)
- Regional Affiliates 457 581 (21.4)
Cargo 144 215 (32.9)
Other revenues 558 522 6.9
---------- ------- ---------
Total operating revenues 4,839 5,697 (15.1)
---------- ------- ---------
Expenses Wages, salaries and benefits 1,688 1,644 2.6
Aircraft fuel 1,298 2,050 (36.7)
Other rentals and landing fees 324 323 0.2
Maintenance, materials and
repairs 305 315 (3.5)
Depreciation and amortization 272 309 (11.8)
Commissions, booking fees and
credit card expense 217 257 (15.6)
Aircraft rentals 124 125 (0.7)
Food service 114 127 (10.0)
Special charges 13 - *
Other operating expenses 678 734 (7.8)
---------- ------- ---------
Total operating expenses 5,033 5,884 (14.5)
---------- ------- ---------
Operating Income (194) (187) 3.4
Other Income (Expense)
Interest income 11 53 (79.2)
Interest expense (186) (206) 9.7
Interest capitalized 10 5 91.8
Miscellaneous - net (16) (5) *
---------- ------- ---------
(181) (153) 18.3
---------- ------- ---------
Income/(Loss) Before Income Taxes (375) (341) 10.1
Income tax - - -
---------- ------- ---------
Net Income $(375) $(341) 10.1
========== ======= =========
Earnings/(Loss) Per Share
Basic $(1.35) $(1.37)
========== =======
Diluted $(1.35) $(1.37)
========== =======
Number of Shares Used in
Computation
Basic 279 249
Diluted 279 249
* Greater than 100%
AMR CORPORATION
OPERATING STATISTICS
(as reclassified)
(Unaudited)
Three Months Ended
March 31,
--------------------- Percent
2009 2008 Change
---------- -------- ---------
Jet Operations Revenue passenger miles
(millions) 28,593 32,488 (12.0)
Available seat miles (millions) 37,783 41,052 (8.0)
Cargo ton miles (millions) 371 505 (26.6)
Passenger load factor 75.7% 79.1% (3.5) pts
Passenger revenue yield per
passenger mile (cents) 12.87 13.48 (4.5)
Passenger revenue per available
seat mile (cents) 9.74 10.67 (8.7)
Cargo revenue yield per ton mile
(cents) 38.90 42.55 (8.6)
Operating expenses per available
seat mile, excluding Regional
Affiliates (cents) (1) 11.82 12.63 (6.5)
Fuel consumption (gallons, in
millions) 617 680 (9.3)
Fuel price per gallon (cents) 191.1 273.2 (30.0)
Regional Affiliates Revenue passenger miles
(millions) 1,861 2,142 (13.1)
Available seat miles (millions) 2,818 3,106 (9.3)
Passenger load factor 66.0% 69.0% (2.9) pts
Average Equivalent Number of
Employees
American Airlines 67,000 71,800
Other 12,500 13,700
---------- ---------
Total 79,500 85,500
========== =========
(1) Excludes to Regional Affiliates in 2009 and 2008, respectively.
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
OPERATING STATISTICS BY REGIONAL ENTITY
American Airlines, Inc. Three Months Ended March 31, 2009
Entity Results -----------------------------------------------
RASM(1) Y-O-Y ASMs(2) Y-O-Y
(cents) Change (billions) Change
--------- --------- ------------ --------
DOT Domestic 9.68 (7.2)% 23.1 (10.7)%
International 9.83 (11.1) 14.7 (3.3)
DOT Latin America 11.23 (8.0) 7.7 (4.5)
DOT Atlantic 7.96 (17.6) 5.3 (3.7)
DOT Pacific 9.28 (7.3) 1.7 4.2
Entity Results ------------------------------------------------
Y-O-Y
Load Factor Change Yield Y-O-Y
(pts) (pts) (cents) Change
----------- --------- -------- --------
DOT Domestic 78.4 (1.8) 12.36 (5.2)%
International 71.5 (6.0) 13.75 (3.6)
DOT Latin America 73.1 (6.1) 15.37 (0.3)
DOT Atlantic 67.6 (6.1) 11.76 (10.3)
DOT Pacific 76.2 (5.7) 12.18 (0.4)
(1) Revenue per Available Seat Mile (2) Available Seat Miles
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
Operations
Three Months Ended March 31,
----------------------------
(in millions, except as noted) 2009 2008
----------- -----------
Total operating expenses $5,061 $5,907
Less: Operating expenses incurred related to Regional Affiliates 596 721
----------- -----------
Operating expenses excluding expenses incurred related to Regional Affiliates American mainline jet operations available seat miles 37,783 41,052
----------- -----------
Operating expenses per available seat mile, excluding Regional Affiliates (cents) 11.82 12.63
=========== ===========
Percent change (6.5)%
Operations
Three Months Ended March 31,
----------------------------
(in millions, except as noted) 2009 2008
----------- ----------
Total operating expenses $5,061 $5,907
Less: Operating expenses incurred related to Regional Affiliates 596 721
----------- -----------
Operating expenses excluding expenses incurred related to Regional Affiliates American mainline jet operations available seat miles 37,783 41,052
----------- -----------
Operating expenses per available seat mile, excluding Regional Affiliates (cents) 11.82 12.63
Less: Impact of special items (cents) .04 -
----------- -----------
Operating expenses per available seat mile, excluding impact of special items (cents) 11.78 12.63
=========== ===========
Percent change (6.8)%
Less: Fuel cost per available seat mile (cents) 3.12 4.52
----------- -----------
Operating expenses per available seat mile, excluding impact of special items and the cost of fuel (cents) 8.66 8.11
=========== ===========
Percent change 6.8%
Note: The Company believes that operating expenses per available seat mile, excluding the cost of fuel assists investors in understanding the impact of fuel prices on the Company's operations.
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
Operating expenses per available seat mile (cents)
Less: Impact of special items (cents) .04 -
----------- ----------
Operating expenses per available seat mile,
excluding impact of special items (cents) 12.36 13.32
Percent change (7.2)%
Less: Fuel cost per available seat mile
(cents) 3.19 4.64
----------- ----------
Operating expenses per available seat mile, excluding impact of special items and the cost of fuel (cents) 9.17 8.68
=========== ==========
Percent change 5.6%
Current and long-term capital lease
obligations 626 776
Principal amount of certain airport facility tax-exempt bonds and the present value of
aircraft operating lease obligations 4,068 4,239
-------- ---------
14,379 15,172
Less: Unrestricted cash and short-term investments 2,864 4,519
Net Debt 11,515 $10,653
======== =========
Note: The Company believes the net debt metric assists investors in understanding changes in the Company's liquidity and the results of its efforts to build a financial foundation under the Company's Turnaround Plan.
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
American Airlines, Inc. Mainline Jet Estimate for
Operations Three Months Ended June 30,
----------------------------
(in millions, except as noted) 2009 2008
------- --------
Operating expenses per available seat mile, excluding Regional Affiliates
(cents) 11.84 15.80
Less: Impact of special item (cents) 0.08 2.52
------- --------
Operating expenses per available seat mile, excluding Regional Affiliates
and impact of special item (cents) 11.76 13.28
======= ========
Percent change (11.5)%
Less: Fuel expense per available seat
mile (cents) 3.09 5.23
======= ========
Operating expenses per available seat mile, excluding Regional Affiliates, impact of special item and fuel expense (cents) 8.67 8.05
======= ========
Percent change 7.7%
Estimate for
American Airlines, Inc. Mainline Jet Year Ended December 31,
Operations ----------------------------
(in millions, except as noted) 2009 2008
--------- ---------
Operating expenses per available seat mile,
excluding Regional Affiliates (cents) 11.83 13.87
Less: Impact of special item (cents) 0.06 0.73
--------- ---------
Operating expenses per available seat mile, excluding Regional Affiliates and impact
of special item (cents) 11.77 13.14
========= =========
Percent change (10.4)%
Less: Fuel expense per available seat mile
(cents) 3.08 4.99
========= =========
Operating expenses per available seat mile, excluding Regional Affiliates, impact of
special item and fuel expense (cents) 8.69 8.15
========= =========
Percent change 6.6%
Estimate for
AMR Corporation Three Months Ended June 30,
-----------------------------
(in millions, except as noted) 2009 2008
--------- ---------
Operating expenses per available seat
mile (cents) 12.41 16.60
Less: Impact of special item (cents) 0.08 2.59
--------- ---------
Operating expenses per available seat mile, excluding impact of special item (cents) 12.33 14.01
========= =========
Percent change (12.0)%
Less: Fuel expense per available seat
mile (cents) 3.18 5.38
========= =========
Operating expenses per available seat mile, excluding impact of special item
and fuel expense (cents) 9.15 8.63
========= =========
Percent change 6.1%
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
AMR Corporation Estimate for
Year Ended December 31,
--------------------------
(in millions, except as noted) 2009 2008
-------- -------
Operating expenses per available seat mile
(cents) 12.39 14.56
Less: Impact of special item (cents) 0.05 0.74
-------- -------
Operating expenses per available seat mile,
excluding impact of special item (cents) 12.34 13.82
======== =======
Percent change (10.7)%
Less: Fuel expense per available seat mile
(cents) 3.18 5.12
======== =======
Operating expenses per available seat mile, excluding impact of special item and fuel expense (cents) 9.16 8.70
======== =======
Percent change 5.3%
Three Months Ended March 31,
AMR Corporation ----------------------------
(in millions, except as noted) 2009 2008
-------- ---------
Net Income/(Loss) (375) (341)
Less: Impact of special items (13) -
-------- ---------
Net Income/(Loss), excluding impact of special items (362) (341)
======== =========
Earnings/(Loss) Per Share
Basic (1.30) (1.37)
Diluted (1.30) (1.37)
Current AMR Corp. news releases can be accessed on the Internet.
The address is: http://www.aa.com
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