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Tuesday, July 27, 2010

American Airlines Parent AMR Posts a Smaller Loss, Orders Planes

Dallas News

AMR Corp ., parent of American Airlines Inc., said Wednesday that it lost $10.7 million in the second quarter – the 10th time in 11 quarters that it has posted a loss.

The Fort Worth-based company also announced that chief financial officer Tom Horton, 49, will step up to become president of AMR and American today, assuming those jobs from chairman and chief executive Gerard Arpey.

AMR also announced that it has ordered 35 Boeing 737-800s to replace its aging and less fuel-efficient McDonnell Douglas MD-80s.

While AMR's $11 million loss is a sharp turnaround from its $390 million loss in second quarter 2009, the results probably will make AMR the only major U.S. carrier to lose money for the three months that ended on June 30.

American's two largest U.S. rivals have posted huge profits for the quarter, the highest in at least 10 years for both. Delta Air Lines Inc. earned $467 million; United Airlines Inc.'s parent earned $273 million.

Smaller AirTran Holdings Inc . and US Airways Group also were profitable.

Despite the loss, Arpey and Horton tried to spread a message of hope as they talked Wednesday to analysts. Horton noted that AMR's operating income of $196 million was its first operating profit in three years, despite the net loss.

On a net basis, AMR lost $10.7 million, or 3 cents a share, only a fraction of the $390 million, or $1.39 a share, it lost a year earlier.

Its revenue rose 16 percent to $5.67 billion from $4.89 billion in the 2009 quarter.

AMR shares fell 23 cents Wednesday to $6.62 in regular trading and lost a penny more in after-hours trading.

"Of course, we are far from satisfied with these results. Losing money is not acceptable," Horton told analysts.

"But we believe the improvement we're seeing indicates that we're headed in the right direction, and we're determined to build on our progress and return to solid profitability."

They pointed to American's strategy of focusing on five major airports and its network to improve its fortunes, helped tremendously by antitrust immunity with its partners across the Atlantic, just approved by regulators; its planned business venture with Japan Airlines, undergoing review now; and its new partnership with JetBlue in Boston and New York.

With Horton's promotion as Arpey's heir apparent, AMR and American have only one remaining executive vice president, Bob Reding, EVP of operations.

Dan Garton, who had been EVP of marketing, moved last month to be president and CEO of AMR's regional operations, American Eagle. Horton said Garton's former duties will be spread among a variety of executives, including a number who received promotions Wednesday.

Horton's replacement as CFO will be Bella Goren, who will keep her title as senior vice president.

When the 35 new 737-800s are delivered in 2011 and 2012, American will fly 195 Boeing 737-800s. And 11 already ordered are scheduled to arrive between 2013 and 2016.

American also said that it won't receive its first Boeing 787-9s until 2014, two years after the original schedule. The delay had been expected after Boeing has had to postpone the new aircraft a number of times.