AMR Corporation, the parent company of American Airlines, Inc., today reported a first quarter net loss of $548 million before a special item, or $3.53 per share. This compares with a net loss of $43 million, or $0.28 per share, in the first quarter of 2001.
"There is no question that our business overall is improving, and there are a number of particularly encouraging signs with regard to our day-to-day operations," said Don Carty, AMRs chairman and chief executive officer. "But the facts are that business travel, which historically constitutes a major portion of our business, is not rebounding the way leisure travel is, and average fares are down because of heavy discounting.
"That, combined with rising labor, security and insurance costs, made for a very tough first quarter," Carty said. "And, at the current slow pace of revenue recovery, I expect we will post a loss in the second quarter as well."
Reflected in AMRs first-quarter results is a $27 million after-tax special charge ($0.18 loss per share) that stems from a provision of Congress economic stimulus package that changes the period for carrybacks of net operating losses
("NOLs"). This change allows companies to carry back 2001 and 2002 NOLs for
five years, rather than two under existing law, allowing AMR to more quickly recover its NOLs and thereby achieve a significant cash benefit. The extended NOL carryback does, however, result in the displacement of foreign tax credits taken in prior years which are now expected to expire before they can be used. As a result, the Company recorded a charge to reflect the anticipated forfeiture of these credits.
Including this special item, AMR reported a first quarter net loss of $575 million, or $3.71 per share.
On a brighter note, Carty said overall consumer demand for air travel continues to climb, and customers are responding positively to Americans exclusive "More Room Throughout Coach" product and a wide range of initiatives the airline has taken to improve and enhance on-time performance and the airport experience.
During the first quarter, American marked the second anniversary of its "More Room" initiative, in which it has created almost one mile of added legroom throughout its coach cabin. To do this, the airline removed 8,730 coach seats from nearly 900 domestic and international aircraft and expanded the living space for more than 100,000 coach seats. The amount of added legroom is about equal to the length of the Golden Gate Bridge.
American also dramatically increased its on-time dependability, as reported to the Department of Transportation (DOT), and completion factor performance the first three months of 2002. Its January DOT performance was up six points to 83.0 percent year over year, February was up more than 13 points to 86.6 percent and March was up more than six points at 80.4 percent. The average completion factor for the quarter was 98.8, up more than three percentage points from a year ago.
The airline also took steps during the period to enhance the airport experience. Among the highlights:
More than 175 OneStop Self-Service machines are helping passengers with electronic tickets at 26 airports, with more to come later in the year.
More than 300 OneStop Curbside check-in units are available in more than 80 cities for domestic customers with paper or electronic tickets.
American reintroduced Telephone Check-in for its elite status AAdvantage members who are not checking baggage and are traveling domestically on an electronic ticket.
American and American Eagle introduced a security checkpoint queuing process at 19 airports to make travel easier for its AAdvantage Gold, Platinum, and Executive Platinum members, AAirpass holders and first class and business class passengers.
"Day in and day out, we are running a much better airline," Carty said, "and our key financial indicators are much improved over where they were late last year in the aftermath of last Septembers tragedies. The problem is that we are coming back from a disastrous starting point, and full recovery is going to be a long and slow process." |
