AP News

Earnings Preview: AMR to report 4Q results


FORT WORTH, Texas (AP) — American Airlines parent AMR Corp. boosted a key revenue figure faster than other airlines through much of 2012, and on Wednesday investors will see how much that helped the bottom line as AMR reports fourth-quarter earnings.

American, the nation's third-biggest airline by passenger traffic, has been under bankruptcy protection since November 2011. The company has been studying whether to merge with US Airways or exit bankruptcy on its own — AMR CEO Thomas Horton has promised a decision soon.

WHAT TO WATCH FOR: American has been reporting solid growth in a closely watched statistic that measures revenue for every mile flown times the seats on those planes. Company executives have touted the statistic as proof that they are fixing the airline, which trails its competitors by many important financial yardsticks.

It's unclear whether the revenue improvement will be enough to boost AMR to a fourth-quarter profit. Through the first nine months of 2012, the company lost $2.14 billion despite a 6 percent increase in revenue. Most of that loss, however, came in the first half of the year, with AMR posting better results in the third quarter.

WHY IT MATTERS: Some airline industry observers believe that strong results could give AMR more leverage to decide whether it wants to merge with US Airways or remain independent. But there is a growing consensus among analysts that a merger is inevitable.

That could be good news for airline investors and bad news for passengers. Fares might be headed higher. JPMorgan Chase analyst Jamie Baker said in a note Monday that an AMR-US Airways merger would leave just four companies — the combined American-US Airways, United, Delta and Southwest — holding 88 percent of domestic U.S. airline capacity, "further unlocking dormant pricing power."

WHAT TO EXPECT: Since AMR is in bankruptcy and its shares trade over the counter instead of on the New York Stock Exchange as they once did, few analysts offered predictions. Only two analysts were counted in the FactSet survey.

LAST YEAR'S QUARTER: AMR reported a loss of $1.1 billion for the fourth quarter of 2011, when the company filed for Chapter 11 protection. Excluding charges to write down the value of planes and other property, AMR would have lost $209 million, which was three times the size of the loss in the same quarter a year earlier. Quarterly revenue a year ago was $6 billion.


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