American parking 27 MD-80s
01-18-2006, 08:01 AM
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American parking 27 MD-80s
MSNBC.com
American grounds 27 aircraft as losses reach $604m
By Doug Cameron in Chicago
Financial Times
Updated: 11:41 a.m. ET Jan. 18, 2006
American Airlines on Wednesday said it had permanently grounded 27 aircraft, highlighting the strategic gulf between network US carriers and the rapid growth of low-fare rivals.
The parking of aircraft by bankrupt carriers last year helped fuel a recovery in revenue across the industry, and prospects for a return to profitability after five years of losses hinge on how much capacity is added in 2006.
American, the largest US airline by revenue, led the industry last year by cutting flights in response to soaring fuel prices, and the decision to ground more aircraft permanently will raise hopes that network carriers will add little or no domestic capacity this year. Meanwhile, low-fare rivals such as Southwest, JetBlue and AirTran plan to add dozens of new aircraft in 2006.
American booked a $155m charge in the fourth quarter against the 27 MD-80 aircraft, 24 of which were already parked in the desert.
The charge helped widen its net loss from $387m to $604m in the three months to December 31, though the airline said cost cuts and efficiency measures helped to generate its first full-year operating profit since 2000, excluding special charges.
The airline ended the year with $4.3bn in cash and short-term investments as it enters the traditionally slow first quarter.
A net loss of $861m in 2005 compared with a deficit of $761m the previous year, with fuel costs adding an extra $1.7bn to expenses in 2006.
The airline said its unit costs fell 2 per cent year-on-year, excluding fuel, and it has already announced plans to cut an additional $500m a year from expenses and boost revenues by an incremental $300m a year.
The improving industry revenue environment in 2006 combined with record load factors in all 12 months for American, with average passenger yields climbing by 9.3 per cent in the year and 13.8 per cent in the final quarter.
Copyright The Financial Times Ltd. All rights reserved.
URL: http://www.msnbc.msn.com/id/10907674/
American grounds 27 aircraft as losses reach $604m
By Doug Cameron in Chicago
Financial Times
Updated: 11:41 a.m. ET Jan. 18, 2006
American Airlines on Wednesday said it had permanently grounded 27 aircraft, highlighting the strategic gulf between network US carriers and the rapid growth of low-fare rivals.
The parking of aircraft by bankrupt carriers last year helped fuel a recovery in revenue across the industry, and prospects for a return to profitability after five years of losses hinge on how much capacity is added in 2006.
American, the largest US airline by revenue, led the industry last year by cutting flights in response to soaring fuel prices, and the decision to ground more aircraft permanently will raise hopes that network carriers will add little or no domestic capacity this year. Meanwhile, low-fare rivals such as Southwest, JetBlue and AirTran plan to add dozens of new aircraft in 2006.
American booked a $155m charge in the fourth quarter against the 27 MD-80 aircraft, 24 of which were already parked in the desert.
The charge helped widen its net loss from $387m to $604m in the three months to December 31, though the airline said cost cuts and efficiency measures helped to generate its first full-year operating profit since 2000, excluding special charges.
The airline ended the year with $4.3bn in cash and short-term investments as it enters the traditionally slow first quarter.
A net loss of $861m in 2005 compared with a deficit of $761m the previous year, with fuel costs adding an extra $1.7bn to expenses in 2006.
The airline said its unit costs fell 2 per cent year-on-year, excluding fuel, and it has already announced plans to cut an additional $500m a year from expenses and boost revenues by an incremental $300m a year.
The improving industry revenue environment in 2006 combined with record load factors in all 12 months for American, with average passenger yields climbing by 9.3 per cent in the year and 13.8 per cent in the final quarter.
Copyright The Financial Times Ltd. All rights reserved.
URL: http://www.msnbc.msn.com/id/10907674/
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