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June 27, 2013

American posts $65 million profit in May, CEO says it expects profitable second quarter

American Airlines' parent company, AMR Corp., reported a $65 million profit in May, according to a court document filed on Thursday.

Excluding $59 million in reorganization fees and other accounting items, the Fort Worth-based carrier would have posted a monthly operating profit of $124 million. The financial disclosure is part of the monthly operating reports AMR is required to file with the bankruptcy court.

"We expect to report a strong, profitable second quarter - our first since 2007," said AMR chief executive Tom Horton in a letter sent to employees on Thursday morning.

The company said it spent $10 million on aircraft financing renegotiations and rejections and $15 million on professional fees during the month. It also spent $1 million on "other" reorganization items which are not detailed in the report.

AMR also said that its mainline carrier, American Airlines, had passenger revenues of $1.6 billion with its regional affiliates, including American Eagle, bringing in $256 million in revenues. Total revenues for the month were $2.12 billion.

The company ended the month with $624 million in cash and $3.9 billion in short-term investments for a total of about $4.5 billion on hand. That number does not include $863 million in restricted cash.

AMR is expected to close its merger with US Airways in the third quarter pending government approval of the deal. US Airways shareholders are voting on the merger at its annual meeting on July 12.

Keep reading for the full letter from Horton.

-Andrea Ahles

Dear American Team:

Today, we reported our financial results for May, which show continued progress toward completion of a most successful restructuring. Thanks to the hard work and dedication of our entire team, we earned a $65 million monthly net profit, a $197 million improvement from May of last year. And we expect to report a strong, profitable second quarter - our first since 2007.

Great things are taking place all across our company. We continue to advance our international business - adding new aircraft, enhancing alliance partnerships, strengthening our existing network and seeking out new destinations. One of our biggest opportunities is Latin America where economic growth is robust and American and oneworld are in the lead. And our lead should only grow as LATAM, Latin America's top airline group, joins the world's best alliance soon.

Moreover, we expect to continue investing in this region to serve our customers even better. We recently began service from DFW to Lima, Peru and are planning to operate service from DFW to Bogota, Colombia in the fall. We continue to grow our business in Brazil as it prepares to host the 2014 World Cup soccer tournament and 2016 Olympic Summer Games. American was recently awarded route authority to begin service between LAX and Sao Paulo starting in November. And late this year, we plan to add new service between Miami and Curitiba and Porto Alegre, for a total of nine destinations in Brazil.

The renewal of our fleet continues at a rapid clip. So far we have taken delivery of 24 new aircraft this year, including six 777-300ERs. And our new Airbus aircraft are rolling down the assembly line with the first delivery scheduled for next month.

And teams across both American and US Airways are working hard and making great progress in preparing for our pending merger. We still expect the merger to close in the third quarter of this year, subject to regulatory approvals.

While there is much more work ahead, the new American is taking shape with your unwavering focus on our customers every day. Thanks for all you do.



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