AMR Posts Record Profit in ‘88, Cites Fare, Passenger Increases

Aided by higher fares, a surge in passengers and improved labor relations, the parent company of American Airlines on Wednesday reported record profits for both 1988 and the year’s final quarter.

AMR Corp. said its profit for 1988 totaled $476.8 million, more than twice the $198.4 million it earned the year before. Its fourth-quarter profit totaled $116.7 million, a rebound from a loss of $805,000 in the same period a year earlier.

Operating revenue for all of 1988 jumped 22.6% to $8.8 billion and was up 25.8% to $2.4 billion for the final quarter.

Robert L. Crandall, AMR’s chairman, said “the elements of our growth plan have begun to come together. Aided by favorable market conditions and our commitment to superior service, we experienced strong growth.”

“It was a great quarter. It was a great year,” said Kevin Murphy, airline analyst for Morgan Stanley & Co., a brokerage firm.

Murphy said American, as a result of a growth strategy initiated in 1983, is earning a high return on assets and significant productivity gains. “They have things in place that Delta, United and Northwest wish they did.”

American, which has the largest fleet in the U.S. airline industry, flew a record 64.8 billion revenue passenger miles last year, up 14% from the 56.8 billion the year earlier. Revenue passenger miles, which provide a key measure of an airline’s performance, are computed by multiplying the number of passengers carried times the number of miles they fly.

The company’s strong showing came despite a 19% rise in operating expenses.