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Old 01-17-2007, 10:16 AM   #1  
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Default AA 231 million profit for the year

AMR CORPORATION REPORTS 2006 NET PROFIT OF $231 MILLION,
COMPANY'S FIRST ANNUAL PROFIT SINCE 2000 AND A
$1.1 BILLION IMPROVEMENT OVER 2005 RESULTS

$17 MILLION NET PROFIT IN FOURTH QUARTER IS THIRD
CONSECUTIVE PROFITABLE QUARTER AND $617 MILLION
IMPROVEMENT OVER YEAR-AGO RESULTS


FORT WORTH, Texas - AMR Corporation, the parent company of American Airlines, Inc., today reported a net profit of $17 million for the fourth quarter of 2006, or $0.07 per share fully diluted.

The current quarter results compare to a net loss of $600 million, or $3.46 per share fully diluted, in the fourth quarter of 2005. Excluding the $191 million net charge for special items, AMR's fourth quarter 2005 net loss was $409 million, or $2.36 per share.

For 2006, AMR posted a $231 million net profit, or $0.98 per share fully diluted, compared to a net loss of $857 million, or $5.18 per share fully diluted, in 2005. AMR's 2005 loss would have been $677 million excluding a $180 million net charge for special items.

"By producing a fourth quarter and full year profit for the first time since 2000, the people of American Airlines made 2006 a proud milestone in our ongoing turnaround," said AMR Chairman and CEO Gerard Arpey. "We executed on every facet of our Turnaround Plan - from bolstering our financial and competitive positions to investing in our product and strengthening our employee pension plans. With the combined effort of the entire American Airlines team, we expect to build on our momentum in 2007."

Arpey noted significant improvement to the Company's cash balance, a notable increase in the funding status of its defined benefit pension plans, and continued debt reduction as examples of AMR's strong momentum in 2006.

AMR contributed $323 million to its defined benefit pension plans in 2006, including a $100 million contribution in the fourth quarter that went beyond the Company's 2006 funding requirement of $223 million. The Company's 2006 pension contributions, along with strong pension fund asset returns, helped to increase the assets held in trust for its defined benefit pension plans by $800 million to $8.5 billion at the end of 2006 and also helped to improve the accumulated benefit obligation funding status of AMR's pension plans to 85 percent, up from 78 percent at the end of 2005.

AMR ended 2006 with $5.2 billion in cash and short-term investments, including a restricted balance of $468 million, compared to a balance of $4.3 billion in cash and short-term investments at the end of 2005, including a restricted balance of $510 million.

The Company reduced total debt, which includes the principal amount of airport facility tax-exempt bonds and the present value of aircraft operating lease obligations, to $18.4 billion at the end of the fourth quarter of 2006, compared to $20.1 billion a year earlier. In addition to $1.2 billion in scheduled principal payments that AMR made in 2006, the Company purchased $190 million of its outstanding debt and lease obligations during the year. AMR reduced net debt, which is defined as total debt less unrestricted cash and short-term investments, from $16.3 billion at the end of 2005 to $13.6 billion at the end of 2006.

AMR reported fourth quarter consolidated revenues of approximately $5.4 billion, an increase of 4.4 percent year over year. Consolidated 2006 revenues totaled $22.6 billion, an 8.9 percent increase over 2005 and a nearly 30 percent increase over the Company's $17.4 billion in total revenue in 2003, the year AMR launched its Turnaround Plan.

In the fourth quarter, Other revenues, including sales from such sources as confirmed flight changes, buy-on-board food services, and third-party maintenance work, increased 11.7 percent year over year to $347 million.

American's mainline load factor - or the percentage of total seats filled - was a record 78.8 percent during the fourth quarter, compared to 77.9 percent in the final quarter of 2005, and yield, which represents average fares, increased 4.0 percent compared to the fourth quarter of 2005. American's passenger revenue per available seat mile (unit revenue) for the fourth quarter increased 5.1 percent compared to the year-ago quarter. For the full year, unit revenue improved 8.8 percent versus 2005.

American's mainline cost per available seat mile (unit cost) in the fourth quarter was down 5.6 percent year over year. Excluding fuel and special items, mainline unit cost for the fourth quarter increased 0.5 percent year over year. For the full year, mainline unit costs increased 3.8 percent from 2005, however, excluding fuel and special items, these costs increased by 1.3 percent.

During the fourth quarter, AMR paid $120 million less for fuel than it would have paid at prices prevailing from the prior-year period. The Company estimates that its Fuel Smart conservation program helps American save more than 90 million gallons of fuel annually.

Our execution under all four tenets of our Turnaround Plan has improved our financial performance and allowed us to continue to meet our obligations to shareholders, lenders, employees and customers," Arpey said. "We have a lot of work left to do, but the track we are on today is the right track to position our company for long-term success." Highlights from 2006 include:

Fourth Quarter
American Airlines Maintenance Services announced that it signed a four-year agreement, valued at more than $30 million, to provide services to Allegiant Air, a subsidiary of Allegiant Travel Company.
American said it will offer customers new choices in light meals, snacks and bottled water. The snacks and bottled water are available for purchase on all flights two hours or longer, and the light meals are available for purchase on flights three hours or longer.
American announced plans to invest $20 million in seat, cabin and entertainment upgrades on its entire fleet of Boeing 767-200 aircraft.
American made an additional $100 million contribution to its employees' defined benefit pension plans. The contribution was in addition to the $223 million it contributed to satisfy required pension funding obligations for 2006.
American introduced international check-in capabilities using airport self-service machines.


Third Quarter
AMR recorded a net profit of $15 million, the first time in nearly six years that it had earned a profit in two consecutive quarters.
American signed a 5-year service agreement with the U.S. Postal Service potentially worth $500 million in revenue to American, which is the largest single contract ever awarded to the Company's Cargo division.
Transport Workers Union (TWU) employees at American line maintenance bases and management set a goal to obtain $95 million of annual value creation for American by the end of 2008. Similar goals were announced earlier in 2006. In the second quarter of 2006, management and TWU Local 567 employees at the American Airlines Alliance Maintenance Base, including American's engine repair joint venture with Rolls Royce, set a goal to create $400 million in value by the end of 2008. In the first quarter of 2006, management, TWU Local 530 officials and employees at the American Airlines Maintenance & Engineering Base in Kansas City set a goal to obtain $150 million in value creation and to turn the base into a profit center by the end of 2007.
The collaboration over the past several years between management, unions and employees helped produce a positive result when Congress passed and President Bush signed a bill that enhances American's ability to fund its pension obligations.
American unveiled its Next-Generation Business Class, which features new lie-flat seats, a personal in-flight entertainment system with audio and video on demand, and other cabin upgrade
s.

Second Quarter
AMR reported a second quarter net profit of $291 million, its most profitable quarter since 2000.
American said it would return 19 non-standard 757 aircraft, acquired from TWA, when their leases expire to save more than $50 million in annual lease costs.
As part of its ongoing effort to improve its balance sheet, AMR issued $400 million in common stock with the intention of using the proceeds for general corporate purposes.
American launched daily nonstop service from Chicago O'Hare International Airport to Shanghai Pu Dong International Airport in Shanghai, China.


First Quarter
American signed a strategic technology agreement with Lenovo to provide Admirals Club members with access to new Lenovo PCs.
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Old 01-17-2007, 02:41 PM   #2  
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Have you hugged your PUP today?

Seriously, good news... now let's get our piece of the pie, dang it! 30% or bust!

73
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Old 01-17-2007, 02:50 PM   #3  
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Now lets see how long till the CEO gets a fat bonus which probably equals the amount made.
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Old 01-17-2007, 02:50 PM   #4  
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AMR has a massive amount of debt on hand; not so good.
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Old 01-17-2007, 03:28 PM   #5  
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AMR has a massive amount of debt on hand; not so good.
Yeap, that is true. But after reading their financials today, I was impressed. At the end of 2005 they had 20.1 billion in debt, now they have 18.3 billion. Also, they ended 2005 with 3.8 billion in cash, now they have 4.7 billion. That is a 2.7 billion swing in the right direction. Now wonder why there stock has skyrocketed.
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Old 01-17-2007, 07:52 PM   #6  
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Originally Posted by aa73 View Post
Have you hugged your PUP today?

Seriously, good news... now let's get our piece of the pie, dang it! 30% or bust!
Wow, a $231 million profit, and only 11 pilots recalled out of 2890 pilots furloughed. But, if you're in Chapter 11, you're hiring! Now, there's a proven formula.
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Old 01-17-2007, 11:32 PM   #7  
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Wow, a $231 million profit, and only 11 pilots recalled out of 2890 pilots furloughed. But, if you're in Chapter 11, you're hiring! Now, there's a proven formula.

They could do more but AA is doling out $218 million in executive stock bonuses. Isn't that something.
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Old 01-18-2007, 03:31 AM   #8  
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Wow, a $231 million profit, and only 11 pilots recalled out of 2890 pilots furloughed. But, if you're in Chapter 11, you're hiring! Now, there's a proven formula.
Patience, my friend. Ramping up to 40/month by May/June. We will probably be hiring within three years.
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Old 01-18-2007, 06:09 AM   #9  
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As a brand-spanking new FE, I once saw a union advertisement that proclaimed their exact position as 'More money, less work'. Having come out of the military and with no previous union experience, I found that odd. I wondered how people would think such an idea would work in the long run.

It didn't, of course. Almost twenty years later, the industry is strewn with the wreckage of those that thought this was the way to go.

In 2003, I recall that there was a claim that the average AA pilot worked something like 47 actual hours for some 70 or so hours of pay. The precise numbers probably aren't as important as the idea.

Us TWA folks also found the APA contract to be quite different from what we had known. It seemed to be an instrument crafted over many years where the objective was to achieve just what that union advert had said. We supposed that the amazing growth and success of AA from the mid 80s was such that AA management went along with these contracts since there seemed to be an inexhaustible supply of pax and money.

Times change. No more inexhaustible supply of money. But a good salary is there to be made if unions drop that 'more money, less work' mantra and go with a 'good money, good work' idea. This idea has certainly worked at SWA.

I suggest to our AA friends here that they take a good look at the Pref Bidding concept. Yes...it does mean doing more with fewer pilots...but now, as attrition reduces the number of pilots, it might be time to reconsider. One number being bandied about back in 2003 was that AA was 20% overstaffed in pilots. Now, if that was true then, it was just another example of that union advert in action.

No doubt, there are those who think that the whole idea is to get as many on the payroll as possible...and then demand top pay for them. Somehow, that just doesn't seem to be a workable idea over time. It sure as heck hasn't proved to be the case over the last 20 years.

Over time, I see our collective futures best assured by a more 'lean and mean' approach to pilot numbers. Overmanning in the long run falls victim to economic turndowns. There has to be a better way. Our careers would be far more stable if we bargained for a 'fair wage for a fair amount of work' position. Not that this would be easy...but perhaps over time, management and labor could find that middle road where both prosper.
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Old 01-18-2007, 07:58 AM   #10  
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Quote:
Originally Posted by shackone View Post
As a brand-spanking new FE, I once saw a union advertisement that proclaimed their exact position as 'More money, less work'. Having come out of the military and with no previous union experience, I found that odd. I wondered how people would think such an idea would work in the long run.

It didn't, of course. Almost twenty years later, the industry is strewn with the wreckage of those that thought this was the way to go.

In 2003, I recall that there was a claim that the average AA pilot worked something like 47 actual hours for some 70 or so hours of pay. The precise numbers probably aren't as important as the idea.

Us TWA folks also found the APA contract to be quite different from what we had known. It seemed to be an instrument crafted over many years where the objective was to achieve just what that union advert had said. We supposed that the amazing growth and success of AA from the mid 80s was such that AA management went along with these contracts since there seemed to be an inexhaustible supply of pax and money.

Times change. No more inexhaustible supply of money. But a good salary is there to be made if unions drop that 'more money, less work' mantra and go with a 'good money, good work' idea. This idea has certainly worked at SWA.

I suggest to our AA friends here that they take a good look at the Pref Bidding concept. Yes...it does mean doing more with fewer pilots...but now, as attrition reduces the number of pilots, it might be time to reconsider. One number being bandied about back in 2003 was that AA was 20% overstaffed in pilots. Now, if that was true then, it was just another example of that union advert in action.

No doubt, there are those who think that the whole idea is to get as many on the payroll as possible...and then demand top pay for them. Somehow, that just doesn't seem to be a workable idea over time. It sure as heck hasn't proved to be the case over the last 20 years.

Over time, I see our collective futures best assured by a more 'lean and mean' approach to pilot numbers. Overmanning in the long run falls victim to economic turndowns. There has to be a better way. Our careers would be far more stable if we bargained for a 'fair wage for a fair amount of work' position. Not that this would be easy...but perhaps over time, management and labor could find that middle road where both prosper.
Agree 100% - when I started at Delta and used to jumpseat to work I flew with guys who were flying 1 trip/month on reserve and making $200K/year - the idea that you should be well paid to not work is an old line Union philosophy that is not going to work again. One thing about Southwest pilots is all their pilots earn their pay - you can work a lot and get paid a lot or work a little and still get paid OK. They don't have anyone sitting reserve and getting paid to do nothing - everyone works.
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