Thomas W. Horton
& Chief Executive Officer
Click photo for print quality image.
Senior Vice President
& Chief Financial Officer
Click photo for print quality image.
AMR Corporation, the parent company of American Airlines, Inc., today reported results for the fourth quarter and year ended December 31, 2012. Key points include:
- Revenue of $24.9 billion in 2012, the highest in company history
- Full-year operating profit of $494 million, excluding special items, a $749 million improvement over 2011
- Full-year net loss of $1.9 billion. Excluding reorganization and special items, the full-year net loss was $130 million, a $932 million improvement over 2011
- American took delivery of 11 new aircraft in the fourth quarter (nine 737-800s and two 777-300ERs) and 30 new aircraft during the full year (28 737-800s and two 777-300ERs), putting the airline on track to have the youngest, most fuel-efficient fleet among U.S. network carriers by 2017
In the fourth quarter, AMR reported a net profit of $262 million compared to a net loss of $1.1 billion in the fourth quarter of 2011. AMR's fourth quarter results include $350 million of net positive reorganization and special items, which are detailed below.
- Excluding reorganization and special items, the net loss in the fourth quarter of 2012 was $88 million, a $121 million improvement from the prior year.
- The fourth quarter of 2012 was negatively impacted by Hurricane Sandy and the early November snow storm in the Northeast and, separately, by the residual headwind on fourth quarter bookings from the operational disruptions experienced in late September and early October. The cumulative impact from these events is estimated to have reduced net profits by $142 million.
- For full-year 2012, American recorded a net loss of $1.9 billion, compared to 2011's full-year net loss of $2.0 billion. AMR's full year 2012 results include $1.7 billion of net negative reorganization and special items, which are detailed below.
- Excluding reorganization and special items, the net loss for 2012 was $130 million, a $932 million improvement over 2011. The company's operating profit, excluding special items, of $494 million for 2012 was a $749 million improvement over last year.
- American achieved labor cost reductions of 17 percent across all workgroups, including management, independent employees and unionized workgroups, all of which ratified agreements for six-year terms. Progress was also made at American Eagle, which achieved costs savings and reached agreements with its unionized workgroups
- American made changes to its organizational structure to reduce management positions, making American's management workgroup the leanest among the network carriers
- Renegotiated the financing terms for more than 400 mainline and regional aircraft, which includes completing its financial contracts on its 216 Embraer aircraft. Improved terms on these aircraft significantly lower AMR's aircraft ownership related costs, while also harmonizing its aircraft retirement and new aircraft delivery schedules
- Negotiated more than 95 percent of American's 725 facility leases
- Evaluated and/or renegotiated over 9,000 vendor/supplier agreements – American's suppliers have made significant contributions to its strategic plan for success, allowing AMR to meet its savings objectives as outlined in its business plan
- Realized over $400 million in restructuring related savings in the fourth quarter, primarily from renegotiated aircraft leases, reductions to management and support staff positions, freezing the pension plans for all workgroups, and sun-setting the retiree medical program for active employees
- For the fourth quarter of 2012, the company reported consolidated revenue of $5.9 billion, 0.3 percent lower compared to the prior year. The combined effects of Hurricane Sandy, the November snow storm in the Northeast, and the booking headwind from the earlier operational disruption, negatively impacted revenue by an estimated $155 million in the fourth quarter.
- Fourth quarter consolidated passenger revenue per available seat mile (PRASM) was comparable to the same period last year, and mainline PRASM decreased by 0.4 percent.
- Absent the same factors that impacted revenues – described above – American estimates that PRASM would have been approximately 2.0 percentage points higher than the fourth quarter of 2011.
- For full-year 2012, AMR reported record consolidated revenue of $24.9 billion, up 3.7 percent compared to 2011, on 1.0 percent less capacity. For 2012, AMR's consolidated and mainline PRASM rose 5.8 percent and 5.6 percent year-over-year, respectively.
- Consolidated revenue performance was driven by a 4.6 percent year-over-year improvement in yield, or average fares paid, and record high consolidated and mainline load factors, or percentage of seats filled, of 82.2 percent and 82.8 percent, respectively. Domestic PRASM improved 5.5 percent in full-year 2012 versus full-year 2011, with PRASM increases across all five of American's hubs.
- International PRASM increased 5.7 percent in 2012 over the prior year, driven by improved yield performance across all entities and increased load factors.
- For the fourth quarter, AMR's consolidated operating expenses, excluding special items, decreased $139 million, or 2.3 percent, versus the same period in 2011.
- American's mainline cost per available seat mile (unit cost) in the fourth quarter decreased 3.3 percent versus the same period last year, excluding special items in both periods.
- Taking into account the impact of fuel hedging, AMR paid $3.22 per gallon for jet fuel in the fourth quarter versus $3.01 a gallon in the fourth quarter of 2011, a 6.6 percent increase. As a result, the company paid $135 million more for fuel in the fourth quarter of 2012 than it would have paid at prevailing prices from the prior-year period.
- Excluding fuel and special items, mainline and consolidated unit costs in the fourth quarter of 2012 decreased 8.9 percent and 7.6 percent year-over-year, respectively, primarily driven by American's restructuring efforts.
- AMR's full year 2012 consolidated operating expenses, excluding special items, were up 0.3 percent, or $84 million, year-over-year. They also reflect a negative impact of $514 million due to higher fuel prices in 2012.
- American's 2012 mainline unit costs, excluding special items, increased 1.5 percent versus the prior year. Excluding fuel and special items, mainline unit costs decreased 0.9 percent for the same period.
- AMR ended the fourth quarter with approximately $4.7 billion in cash and short-term investments, including a restricted cash balance of $850 million, compared to a balance of approximately $4.7 billion in cash and short-term investments, including a restricted balance of approximately $738 million, at the end of the fourth quarter of 2011.
Reorganization and Special Items
- AMR's fourth quarter 2012 results include $350 million of net positive reorganization and special items
- AMR's full year 2012 results include $1.7 billion of net negative reorganization and special items
- AMR estimates consolidated capacity in the first quarter of 2013 to be down 1.7 percent versus the first quarter of 2012
- Absent the impact of the capacity reductions in January and February of 2012 due to pilot retirements, consolidated capacity in the first quarter of 2013 is estimated to be down 3.4 percent year-over-year
First Quarter Unit Costs Guidance
- AMR will continue to realize restructuring related savings and estimates that in the first quarter of 2013, unit costs will improve year-over-year, despite a capacity headwind due to consolidated capacity decreasing by 1.7 percent and lapping some restructuring related savings that impacted the first quarter of last year.