American Airlines parent posts $45M profit, boosted by sale of financial unit

Oct 15, 2008 (The Dallas Morning News - McClatchy-Tribune Information Services via COMTEX) -- AMR | Quote | Chart | News | PowerRating -- AMR Corp., parent of American Airlines Inc., said Wednesday it earned $45 million in the third quarter, with profits boosted by its $432 million proceeds from the sale of its American Beacon Advisors.

Excluding special items, AMR said it lost $360 million, a sharp turnaround from its $175 million profit in the same quarter of 2007.

American also announced its plans to buy 42 of Boeing's next-generation wide-body jet, the 787, between 2012 and 2018. It secured the rights to buy an additional 48 Boeing 787s to be delivered between 2015 and 2020.

Although Boeing reportedly is sold out of the Boeing 787 to at least 2014, Boeing and American signed a contract in 1996 that gave the airline the right to buy airplanes on relatively short notice. In exchange, American had committed to buying nothing but Boeing aircraft for 20 years.

For the third quarter, AMR blamed higher fuel prices for the worsening results, as it spent $2.72 billion for jet fuel in the three months ended Sept. 30 -- nearly $1 billion more it paid for fuel in third quarter 2007.

The price of jet fuel has dropped sharply in recent months, following the decline in crude oil. However, "the economic uncertainty, and what that might mean for travel demand, is a serious concern," AMR chairman and chief executive Gerard Arpey cautioned.

"It would also be shortsighted to conclude that fuel prices, which remain volatile, are no longer a challenge," he said.

He said AMR adjusted by reducing its capacity and retiring less-efficient airplanes, "and those efforts have gained traction. Our progress in bolstering our liquidity also has been critical given the turmoil in the credit markets."

AMR earned $45 million, or 17 cents a share, on revenues of $6.42 billion. In third quarter 2007, the company reported net income of $175 million, or 61 cents a share, on revenues of $5.95 billion.

Excluding special items, AMR lost $360 million, or $1.39 per share, in the third quarter 2008. Analysts were expecting a $1.40 per share loss.

AMR booked a $432 million gain from its American Beacon sale, offset by $27 million in one-time employee severance and aircraft charges. AMR said it expects to record another $121 million in special charges going forward, with most to come from terminating leases on Airbus A300 airplanes that it is parking.

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