American Airlines parent earns its first full-year profit since 2000

AMR, the parent of American Airlines, has posted its first annual profit in five years. (1/19/2007)The company announced a net profit of $17 million for the three months ended December 31, 2006, beating by a long shot a net loss of $409 million during the same quarter of 2005 [excluding a $191 million net charge for special items]. AMR Corp. also posted its first full-year profit since 2000, helped by strong demand for travel that allowed carriers to raise fares throughout the year. AMR ended 2006 with $5.2 billion in cash and short-term investments, compared to a balance of $4.3 billion at the end of 2005. AMR said it earned $231 million, or 98 cents per share, for all of 2006 compared to a loss of $857 million or $5.18 per share in 2005. Revenue rose 8.9 percent, to $22.56 billion from $20.71 billion in 2005. AMR improved its financial position and invested in the airline during 2006 and expects to build on its momentum in 2007. Chairman and chief executive Gerard Arpey called the results a milestone in the company’s turnaround. “Analysts who track AMR had switched from bulls to bears in late December, when the company warned that costs were rising and revenue wasnt growing as fast as Wall Street expected. That triggered the predictions of a fourth-quarter loss. Revenue rose 4.4 percent, to $5.40 billion in the fourth quarter from $5.17 billion a year ago. Analysts expected $5.50 billion,” reported media. “But the company cut its costs even more sharply, by 6.1 percent. AMR caught a break when fuel prices eased late in the year, as the company reduced its fuel bill by 8.5 percent, or $135 million _ more than enough to make the difference between profit and loss for the quarter.” Meanwhile, Southwest Airlines Co. reported another profit but smaller than a year ago. Southwest reported that its fourth-quarter profit declined 19 percent from a year earlier, although operating profit rose to meet Wall Street’s expectations, and revenue jumped 15 percent. As per the information available, its net income fell to $57 million, or 7 cents per share, from $70 million, or 9 cents per share, a year ago. Revenue rose to $2.28 billion from $1.99 billion a year earlier.

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