American Airlines parent AMR posts 3Q profit

AP News
Posted: Oct 20, 2010 1:00 PM
American Airlines parent AMR posts 3Q profit

It took American Airlines a little longer than its rivals, but the nation's third-largest airline finally earned a profit for the first time in two years.

The news sent shares of parent AMR Corp. higher. The stock was up 61 cents, or 9.3 percent, at $7.13 in afternoon trading.

AMR said Wednesday that it earned $143 million, or 39 cents per share, in the third quarter that includes much of the peak summer travel season.

That topped expectations. Analysts expected AMR to make 32 cents per share.

Revenue jumped 14 percent, to $5.84 billion, matching analysts' forecast.

Passenger yield, or the average fare per mile, rose 10.7 percent. Airlines have tightly controlled the number of available seats, which has helped them drive up fares this year.

The big airlines with international service also are being helped by a rebound in corporate travel, which was hit hard during the recession, and more traffic on their overseas routes.

American hopes to take advantage of those trends with a major expansion of flights to and from Los Angeles, including new service to Shanghai. China Eastern Airlines already flies between Los Angeles and Shanghai, and United Airlines announced plans to fly the route shortly after American did.

"It's a very important business route, and it's a big market for some of our corporate accounts in Southern California," said Virasb Vahidi, American's chief commercial officer.

American is staking its future on boosting flying to Asia and Europe and growing in five key U.S. markets: L.A., New York, Chicago, Miami and Dallas.

AMR also brought in $602 million in so-called ancillary revenue, chiefly fees on checked bags and other services. That was a modest 2.7 percent increase in one year.

Before Wednesday, AMR hadn't reported a profit since the third quarter of 2008, when it sold an investment business. It was the only major U.S. airline company to lose money in this year's second quarter.

The upbeat earnings report from AMR came the same day that Delta and US Airways also beat profit expectations, and that helped push airline stocks higher. The AMEX Airline Index was up about 5 percent by early afternoon, with all 12 component stocks higher.