Friday, April 20, 2012

With US Air in Pursuit, American Airlines Posts $1.7 Billion Loss for 1st Quarter

Wonder just how eager American Airlines is to find someone to buy the joint? Not clear, especially with such decisions now in the hands of bankruptcy court, but US Airways is in pursuit anyway.

Meanwhile, AMR, the airline's parent company, says it lost $1.7 billion in the first quarter of this year -- though it says most of that was due to costs of its bankruptcy filing and reorganization and various "special items."

Otherwise the net loss would have been $248 million. In last year's first quarter American had a loss of $405 million.

Revenue in the most recent quarter was up 9.1 percent to about $6 billion, and yields (read: fares) were up 7.3 percent, which are good signs to a potential buyer like US Airways.  On the other hand, operating expenses were up 6.6 percent. That's the first place a buyer will be looking to cut, along with capacity, which was up slightly, with a relatively low (by industry standards these days) load factor of 79 percent.

US Air, while not yet announcing any official move to buy American, said today that it has in its pocket an agreement from American's pilots, flight attendants and mechanics unions that greenlights a merger with American.

But I also would point to an e-mail alert that Joe Brancatelli sent this afternoon to his members at  "American management has approximately ZERO interest in doing business with US Airways, just as US Airways management was rebuffed when it tried to do a deal with both Delta and United," he said, noting also that the bankruptcy court has exclusive jurisdiction over AA matters and that the unions' agreement appears to be a tactical move as the bankruptcy court takes up American's petition to void its union contracts.

"Today's news does not mean that we have agreed to merge with American Airlines,"  Doug Parker, the US Air CEO, said in a letter today to US Air employees.  "It only means that we have reached agreements with these three unions on what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality."

A merger, of course, would need the approval of the bankruptcy court.

In a statement today, Laura Glading, the president of the Association of Professional Flight Attendants, which represents American's flight attendants, said: "I was approached by members of the US Airways management team who were interested in discussing a potential merger." Along with the other two major unions, "each of us individually came to the conclusion that a merger would be the best plan for our membership and the most successful reorganization of our company."


No comments: