American Airlines posts third quarter profit

Charisse Jones, USA TODAY1:27 p.m. EDT October 17, 2013

American is in the midst of a lawsuit trying to block its proposed merger.


(Photo: Wilfredo Lee, AP)

STORY HIGHLIGHTS
Company posts profit of $289 million

  • Airline is fighting Justice Department over planned merger with US Airways
  • It is the airline's second profitable quarter in a row



The parent company of American Airlines, which is in the midst of a federal lawsuit seeking to block its proposed merger with US Airways, posted a profit of $289 million in the third quarter, the second profitable quarter in a row for the airline.
AMR said Thursday that the quarterly profit was $527 million more than what it brought in during the same three-month period in 2012, when the airline operated at a loss.
The airline company, which has been under bankruptcy protection, said that without the costs of reorganization and other special items, it would have seen a profit of $530 million. That would have made this most recent fiscal period the most profitable quarter in American's history.
In a statement, AMR's chairman, president and CEO Tom Horton attributed the positive returns partly to a reining in of costs as the company restructures and swaps out older planes for new jets. And the efforts, he said, bode well for a union with US Airways.
"Continued execution on our product, network and alliance strategy, combined with cost efficiencies from restructuring and fleet renewal, creates strong momentum toward our planned merger with US Airways,'' Horton said.
American and US Airways announced plans to merge in February, an $11 billion deal that would make the newly combined carrier the biggest in the world based on revenue and the number of passengers it flies. The carriers need to join forces, they say, to better compete with Delta and United, who have been bolstered by their own recent, major mergers.
But in a move that shocked industry watchers, the Department of Justice, along with the attorneys general for several states and the District of Columbia, filed suit to stop American's tie-up with US Airways. They argued that it would boost fares and reduce competition between 1,000 cities where US Airways offers one-stop connections.
The two-week trial is set to start on Nov. 25. Earlier this month, Texas, which had joined the Justice Department in challenging the merger, withdrew from the case. The state has received a three-year commitment that the new American's headquarters would remain in Texas, while service to 22 airports throughout the state would also continue.
Basili Alukos, a credit analyst with Morningstar, noted that American's quarterly revenue was its highest for a quarter ever, while some of its costs were also improving.
"It appears AMR is operating on all cylinders,'' he says.

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