Thanks in large part to the cost-cutting it undertook to avoid filing for bankruptcy, the parent of American Airlines reported a $6 million profit for the second quarter, a period when most other major airlines reported losses because of sharply higher fuel prices.
Gerard J. Arpey, AMR Corp.'s chief executive, said the airline spent $240 million more on fuel last quarter than it would have spent at last year's prices. "This was a much more difficult quarter than we had expected," Arpey said.
Without $31 million in restructuring gains, AMR would have lost $25 million, or 15 cents a share. That was 5 cents more than analysts' forecasts, according to Thomson First Call. AMR lost $357 million excluding special gains and charges, and $75 million including them, in the same period a year earlier.
Revenue increased 12 percent to $4.83 billion, helped by a 10.4 percent spike in passenger traffic.
During the past two years, American has been cutting its costs and trimming operations. The airline's employees agreed to take $1.8 billion a year in pay and benefit cuts. The carrier significantly trimmed its flights at its hub airports in Chicago, St. Louis and Dallas. And American has reduced the number of aircraft types in its fleet from 14 to six. Arpey said the airline is looking for more ways to trim costs to remain competitive with low-cost carriers.
The second quarter, with its summer vacationers, is typically one of the most profitable periods for airlines. But due to dramatically increased fuel costs and lower fares, the most recent period is proving to have been one of the worst second quarters in the industry's history. The airlines continue to struggle even as the economy is growing and the carriers are filling more than 80 percent of their seats on many routes -- the highest percentages since the Sept. 11, 2001, terrorist attacks.
The older, full-service airlines are struggling to overcome the success of the no-frills airlines and the ease of shopping for cheap fares on the Internet. Low-cost airlines including Southwest, JetBlue and AirTran make up about 70 percent of the nation's route system, compared with just 30 percent a decade ago, according to recent estimates by the Air Transport Association, the airlines' trade group.
Jet fuel prices reached nearly $38 a barrel this month, compared with about $20 a barrel in 2001, according to Air Transport estimates. That increase in fuel prices has cost the industry about $3 billion this year, the group said.
Industry analysts expect American -- the world's largest airline -- to report the largest profit among the traditional hub-and-spoke carriers.
Northwest Airlines, the nation's fourth-largest airline, yesterday reported a second-quarter loss of $182 million ($2.11 a share). In the same quarter a year ago, Northwest reported a profit of $227 million ($2.45).
Excluding one-time charges related to the write-down of parked aircraft, the world's fifth-largest airline lost $78 million (90 cents), narrower than Wall Street's loss estimate of $1.21 a share. Northwest's revenue increased 19 percent to $2.87 billion, while traffic increased nearly 15 percent.
Phoenix's America West Airlines, which has transformed itself into one of the lowest-cost carriers, made a profit of $5.7 million (11 cents), compared with $79.7 million ($2.02) for the same period a year ago.
America West said its fuel costs increased 41 percent year-over-year. Revenue climbed 5.1 percent to $605.1 million, attributable in large part to a 7.5 percent increase in passengers.
Delta Air Lines, which is trying to get concessions of about $850 million a year from its unionized pilots to avoid filing for bankruptcy, Tuesday reported a net loss of nearly $2 billion, its worst quarterly loss ever. Delta's pilots union late Tuesday submitted a proposal that union officials said would save the airline about $705 million a year. But yesterday, Delta chief executive Gerald Grinstein said the proposal was not enough, and he scheduled a meeting this month to discuss the carrier's future.
Blaylock & Partners analyst Raymond Neidl said he expects the remainder of the year to be challenging for the airlines as fuel prices remain high and the airlines enter slower travel periods.