AMR Corporation Reports a Fourth Quarter Loss of $604 Million, As Compared to a $387 Million Loss in 2004
Jan 18, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- AMR Corporation (NYSE: AMR), parent company of American Airlines, Inc., today reported a net loss of $604 million in the fourth quarter of 2005, or $3.49 per share, as compared to a net loss of $387 million, or $2.40 per share, in the fourth quarter of 2004. The loss for the fourth quarter of 2005 includes a net $191 million negative impact of special items, including $155 million for aircraft charges, $73 million for facility charges and a $37 million gain related to debt restructuring. Without these special items, AMR would have recorded a net loss of $413 million, or $2.39 per share, in 2005. The net loss in the fourth quarter of 2004 was $473 million, or $2.94 per share, excluding an $86 million net gain due to special items.
For the year 2005, AMR posted a $93 million operating loss and a net loss of $861 million, as compared to 2004's full-year operating loss of $144 million and net loss of $761 million. Special items resulted in a net charge of $180 million in 2005 and a net gain of $135 million in 2004. Excluding these special items, the Company's net loss would have been $681 million in 2005, with operating earnings of $100 million, and $896 million in 2004, with an operating loss of $133 million.
"Our fourth quarter results close the book on another very difficult year," said AMR Chairman and CEO Gerard Arpey. "But while we are dissatisfied with our financial results, we did make progress in a number of important areas during the year, including our first annual operating profit, excluding special items, since the year 2000. As a result, we have -- unlike many of our competitors -- continued to meet our various financial obligations, including funding our defined benefit pension programs. And, by working together with our people and our unions, we have continued to improve the efficiency and productivity of every part of the company. Our collaborative approach enabled us to retain control of our destiny in 2005, despite a challenging revenue environment and higher fuel prices driving a $1.7 billion increase in fuel costs, compared to what we would have paid at 2004 prices."
During the fourth quarter, the Company paid $433 million more for fuel than it would have paid at 2004 prices and, on a year over year basis, American's mainline cost per available seat mile was up by 12.9 percent. Excluding fuel and special items, mainline unit costs increased 2.8 percent versus the fourth quarter of 2004. For the full year, mainline unit costs increased 7.9 percent; however, excluding fuel and special items, these unit costs decreased 2.0 percent.
Arpey congratulated the airline's employees for lowering unit costs, excluding fuel and special items, for the fourth year in a row in 2005. He also pointed out that good customer service, capacity restraint, new products, and numerous fleet and schedule changes enabled American to outperform the industry in generating passenger revenue. Included in the numerous fleet and schedule changes was the year-end decision to permanently ground 27 MD80 aircraft, 24 of which had previously been in temporary storage. The remaining three aircraft were grounded as of Dec. 31, 2005.
For the quarter, American's passenger revenue per available seat mile was up 13.8 percent year over year. American's load factor -- or percentage of seats filled -- for the fourth quarter was 77.9 percent, up 3.6 points over the fourth quarter of 2004, while yield, representing average fares, was up 8.5 percent.
"As our revenue performance indicates, we have been doing a good job of giving customers what they value, and leveraging our global network, strong brand and well-earned reputation for customer service," Arpey said. "We expect these American strengths to continue serving us well in 2006 and beyond, but the fact is we need to do more -- on both the cost and revenue sides of the ledger -- to return our company to sustained profitability."
Arpey noted that the Performance Leadership Initiative (PLI) -- a collaborative effort launched in 2005 -- has the potential to generate substantial improvements, and close gaps between the company's performance, and what would be considered best in class. "PLI is the natural next step in the Turnaround Plan we launched several years ago," Arpey said. "Every work group in the company has participated in identifying the areas where more improvement is needed."
Arpey said one important by-product of the company's collaborative approach has been its ability to meet all of its pension obligations. During the fourth quarter, AMR contributed $22 million to its various defined benefit plans, bringing the 2005 total pension contribution to $310 million.
AMR ended the year with $4.3 billion in cash and short-term investments, including a restricted balance of $510 million.
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" and similar expressions are intended to identify 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, overall economic conditions, plans and objectives for future operations, 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.
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: changes in economic, business and financial conditions; the Company's substantial indebtedness; continued high fuel prices and the availability of fuel; further increases in the price of fuel; the impact of events in Iraq; conflicts in the Middle East or elsewhere; the highly competitive business environment faced by the Company, characterized by increasing pricing transparency and competition from low cost carriers and financially distressed carriers; historically low fare levels and fare simplification initiatives (both of which could result in a further deterioration of the revenue environment); the ability of the Company to reduce its costs further without adversely affecting operational performance and service levels; uncertainties with respect to the Company's international operations; changes in the Company's business strategy; changes in the price of the Company's stock; actions by U.S. or foreign government agencies; the possible occurrence of additional terrorist attacks; another outbreak of a disease (such as SARS or Avian Flu) that affects travel behavior; uncertainties with respect to the Company's relationships with unionized and other employee work groups; the inability of the Company to satisfy existing financial or other covenants in certain of its credit agreements; the availability and terms of future financing; the ability of the Company to reach acceptable agreements with third parties; and increased insurance costs and potential reductions of available insurance coverage. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's 2004 Form 10-K.
Detailed financial information follows:
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended December 31, Percent
2005 2004 Change
Revenues
Passenger - American Airlines $4,080 $3,610 13.0
- Regional Affiliates 566 463 22.2
Cargo 162 173 (6.4)
Other revenues 360 295 22.0
Total operating revenues 5,168 4,541 13.8
Expenses
Wages, salaries and benefits 1,776 1,680 5.7
Aircraft fuel 1,585 1,188 33.4
Other rentals and landing fees 306 286 7.0
Depreciation and amortization 296 329 (10.0)
Commissions, booking fees and
credit card expense 264 244 8.2
Maintenance, materials and repairs 228 230 (0.9)
Aircraft rentals 148 151 (2.0)
Food service 119 137 (13.1)
Other operating expenses 830 651 27.5
Total operating expenses 5,552 4,896 13.4
Operating Loss (384) (355) 8.2
Other Income (Expense)
Interest income 45 19 *
Interest expense (260) (223) 16.6
Interest capitalized 6 20 (70.0)
Miscellaneous - net (11) 152 *
(220) (32) *
Loss Before Income Taxes (604) (387) 56.1
Income tax --- --- *
Net Loss $(604) $(387) 56.1
Basic and Diluted Loss Per Share $(3.49) $(2.40)
Number of Shares Used in Computation
Basic and Diluted 173 161
* Greater than 100%
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended
December 31, Percent
2005 2004 Change
American Airlines, Inc.
Mainline Jet Operations
Revenue passenger miles (millions) 33,226 31,893 4.2
Available seat miles (millions) 42,627 42,906 (0.7)
Cargo ton miles (millions) 573 586 (2.2)
Passenger load factor 77.9% 74.3% 3.6 pts.
Passenger revenue yield per
passenger mile (cents) 12.28 11.32 8.5
Passenger revenue per available
seat mile (cents) 9.57 8.41 13.8
Cargo revenue yield per ton mile
(cents) 28.35 29.56 (4.1)
Operating expenses per available
seat mile, excluding Regional
Affiliates (cents) (A) 11.57 10.25 12.9
Fuel consumption (gallons,
in millions) 706 738 (4.3)
Fuel price per gallon (cents) 202.1 147.4 37.1
Regional Affiliates
Revenue passenger miles (millions) 2,359 1,928 22.4
Available seat miles (millions) 3,262 2,877 13.4
Passenger load factor 72.3% 67.0% 5.3 pts.
AMR Corporation
Average Equivalent Number of Employees
American Airlines 74,000 77,500
Other 13,200 13,200
Total 87,200 90,700
(A) Excludes $655 million and $561 million of expense incurred related
to Regional Affiliates in 2005 and 2004, respectively.
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
American Airlines, Inc.
Mainline Jet Operations Three Months Ended December 31,
(in millions, except as noted) 2005 2004
Total operating expenses $5,588 $4,957
Less: Operating expenses incurred
related to Regional Affiliates 655 561
Operating expenses excluding expenses
incurred related to Regional Affiliates $4,933 $4,396
American mainline jet operations
available seat miles 42,627 42,906
Operating expenses per available seat mile,
excluding Regional Affiliates (cents) 11.57 10.25
Impact of special items (cents) (0.44) (0.14)
Fuel cost per available seat mile (cents) (3.35) (2.54)
Operating expenses per available seat mile,
excluding impact of special items and
the cost of fuel (cents) 7.78 7.57
Percent change 2.8%
AMR Corporation
Impact of Fuel Price Variance
Average fuel price per gallon (cents)
Three months ended December 31, 2005 203.3
Three months ended December 31, 2004 147.7
Change in price (cents) 55.6
2005 consumption (gallons, in millions) x 779.4
Impact of fuel price variance
(in millions) $433.3
Note: The Company believes that operating expenses per available seat
mile, excluding special items and the cost of fuel, as well as the impact
of fuel price increases, assist investors in understanding the impact of
fuel prices on the Company's operations, without regard to special items.
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
AMR Corporation
Impact of Special Items
(in millions, except per share amounts)
Three Months Ended
December 31, 2005
Amount EPS
Net loss $(604) $(3.49)
Less: Impact of special items 191 1.10
Net loss excluding special items $(413) $(2.39)
AMR Corporation
Impact of Special Items
(in millions, except per share amounts)
Three Months Ended
December 31, 2004
Amount EPS
Net loss $(387) $(2.40)
Add: Impact of special items (86) (0.54)
Net loss excluding special items $(473) $(2.94)
Note: The Company believes the loss excluding special items assists
investors in understanding the impact of the special items on the
Company's financial results.
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Twelve Months Ended December 31, Percent
2005 2004 Change
Revenues
Passenger - American Airlines $16,614 $15,021 10.6
- Regional Affiliates 2,148 1,876 14.5
Cargo 622 625 (0.5)
Other revenues 1,328 1,123 18.3
Total operating revenues 20,712 18,645 11.1
Expenses
Wages, salaries and benefits 6,755 6,719 0.5
Aircraft fuel 5,615 3,969 41.5
Other rentals and landing fees 1,262 1,187 6.3
Depreciation and amortization 1,164 1,292 (9.9)
Commissions, booking fees and
credit card expense 1,113 1,107 0.5
Maintenance, materials and repairs 989 971 1.9
Aircraft rentals 591 609 (3.0)
Food service 507 558 (9.1)
Other operating expenses 2,809 2,377 18.2
Total operating expenses 20,805 18,789 10.7
Operating Loss (93) (144) (35.4)
Other Income (Expense)
Interest income 149 66 *
Interest expense (957) (871) 9.9
Interest capitalized 65 80 (18.8)
Miscellaneous - net (25) 108 *
(768) (617) 24.5
Loss Before Income Taxes (861) (761) 13.1
Income tax --- --- *
Net Loss $(861) $(761) 13.1
Basic and Diluted Loss Per Share $(5.21) $(4.74)
Number of Shares Used in Computation
Basic and Diluted 165 161
* Greater than 100%
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Twelve Months Ended
December 31, Percent
2005 2004 Change
American Airlines, Inc.
Mainline Jet Operations
Revenue passenger miles
(millions) 138,374 130,164 6.3
Available seat miles (millions) 176,112 174,015 1.2
Cargo ton miles (millions) 2,209 2,203 0.3
Passenger load factor 78.6% 74.8% 3.8 pts.
Passenger revenue yield per
passenger mile (cents) 12.01 11.54 4.1
Passenger revenue per available
seat mile (cents) 9.43 8.63 9.3
Cargo revenue yield per ton mile
(cents) 28.21 28.36 (0.5)
Operating expenses per available
seat mile, excluding Regional
Affiliates (cents) (A) 10.50 9.73 7.9
Fuel consumption (gallons,
in millions) 2,948 3,014 (2.2)
Fuel price per gallon (cents) 172.3 121.2 42.2
Regional Affiliates
Revenue passenger miles (millions) 8,946 7,283 22.8
Available seat miles (millions) 12,714 10,835 17.3
Passenger load factor 70.4% 67.2% 3.2 pts.
(A) Excludes $2.5 billion and $2.1 billion of expense incurred related
to Regional Affiliates in 2005 and 2004, respectively.
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
American Airlines, Inc.
Mainline Jet Operations Twelve Months Ended December 30,
(in millions, except as noted) 2005 2004
Total operating expenses $21,008 $19,029
Less: Operating expenses incurred
related to Regional Affiliates 2,515 2,104
Operating expenses excluding expenses
incurred related to Regional Affiliates $18,493 $16,925
American mainline jet operations
available seat miles 176,112 174,015
Operating expenses per available seat mile,
excluding expenses incurred related to
Regional Affiliates (cents) 10.50 9.73
Impact of special items (cents) (0.11) (0.01)
Fuel cost per available seat mile (cents) (2.91) (2.09)
Operating expenses per available seat mile,
excluding impact of special items and
the cost of fuel (cents) 7.48 7.63
Percent change (2.0%)
AMR Corporation
Impact of Fuel Price Variance
Average fuel price per gallon (cents)
Twelve months ended December 31, 2005 173.5
Twelve months ended December 31, 2004 121.6
Change in price (cents) 51.9
2005 consumption (gallons, in millions) x 3,237.0
Impact of fuel price variance
(in millions) $1,680.0
Note: The Company believes that operating expenses per available seat
mile, excluding special items and the cost of fuel, as well as the
impact of fuel price increases, assist investors in understanding the
impact of fuel prices on the Company's operations, without regard to
special items.
AMR CORPORATION
NON-GAAP AND OTHER RECONCILIATIONS
(Unaudited)
AMR Corporation
Impact of Special Items
(in millions, except per share amounts)
Twelve Months Ended
December 31, 2005
Amount EPS
Net loss $(861) $(5.21)
Less: Impact of special items 180 1.09
Net loss excluding special items $(681) $(4.12)
AMR Corporation
Impact of Special Items
(in millions, except per share amounts)
Twelve Months Ended
December 31, 2004
Amount EPS
Net loss $(761) $(4.74)
Add: Impact of special items (135) (0.84)
Net loss excluding special items $(896) $(5.58)
AMR Corporation
Impact of Special Items on Operating Earnings
(in millions, except per share amounts)
Twelve Months Ended
December 31
2005 2004
Operating income (loss) $(93) $(144)
Less: Impact of special items (A) 193 11
Operating income (loss) excluding
special items $100 $(133)
(A) Certain special items in 2005 and 2004 did not impact operating
earnings.
Note: The Company believes the operating income/(loss) and net loss
excluding special items assists investors in understanding the impact of
the special items on the Company's financial results.
Current AMR Corp. news releases can be accessed on the Internet.
The address is: http://www.aa.com
SOURCE AMR Corporation
Al Becker, Corporate Communications of AMR Corporation, +1-817-967-1577, or corp.comm@aa.com
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