AMR Posts Significant Reduction in Red Ink

AMR Corp., the parent company of American Airlines, said Wednesday that it reduced its fourth-quarter loss by 79% with the help of a massive cost-cutting campaign aimed at saving the world’s largest airline from bankruptcy.

The Fort Worth-based company’s fourth-quarter loss was $111 million, or 70 cents a share. It posted a loss of $529 million, or $3.39 a share, for the same quarter a year earlier.

Revenue for the quarter was $4.39 billion, up 3.9% from a year earlier. The carrier said it had a 12% decline in unit costs, excluding special items.

AMR cautioned that it still had a lot of work ahead before it could return to profitability.

“While we are pleased with the tremendous progress we have made, we are certainly not breathing easy,” said James Beer, the airline’s chief financial officer. “There is still a lot of work ahead of us to enable AMR to achieve sustained profitability at acceptable levels.”

The company offered no projection of when it could return to profitability, and even though it has lower costs than many of its oldest rivals, American still has a cost structure that is higher than low-fare rivals such as Southwest Airlines.

AMR was up 83 cents to $14.55 at the close of trading Wednesday on the New York Stock Exchange.

American teetered on the brink of bankruptcy less than a year ago and has launched a restructuring plan aimed at cutting costs by $4 billion a year.

The airline had been burning through millions of dollars a day in its daily operations, but is now generating a positive cash flow.

AMR said it ended the fourth quarter with $3.1 billion in cash and short-term investments.

“As a result of our restructuring, we have turned the tide and now find ourselves with record-high cash balances and the ability to pay down some debt,” Beer said.