American Airlines stock takes off as cost cuts drive record revenue

City A.M. Reporter
AMERICAN Airlines parent AMR reported higher-than-expected earnings yesterday as it cut costs and revenue reached a record for any quarter.

The US carrier, which is looking to emerge from bankruptcy by merging with US Airways Group, has renegotiated plane leases, cut management and frozen pension plans to lower costs since filing for bankruptcy in November 2011. New labour contracts with unions have also made it more cost-competitive.

AMR chief executive Tom Horton said more revenue and profit improvement was to come as the carrier upgrades its fleet with new planes and expands service to higher-growth markets. For example, a new flight from Dallas Fort Worth to Hong Kong was announced this week.

“There are more cost savings to be had,” Horton said. “A number of new contracts with suppliers and vendors don’t actually take effect until the day we exit restructuring.”

Net income came to $289m, or 76 cents a share, in the third quarter, compared with a loss of $238m, or 71 cents a share, a year earlier.

Excluding restructuring costs and special items, profit was $530m, the most profitable quarter in company history, Horton said.

Shares rose 9.34 per cent.