American Airlines parent reports profit

By David Koenig
Associated Press

American Airlines' chief executive officer Gerard Arpey says a slight third-quarter profit shows progress, but it is too early to declare victory. The world's largest airline had a string of losses since the beginning of 2001. Associated Press

AMR Corp. said it earned about $1 million in the July-September period — break-even on a per-share basis — on revenue of $4.6 billion, topping Wall Street's expectations. AMR lost $924 million in last year's third quarter.

The results marked a stunning turnaround for the world's largest airline, which has lost $6.4 billion in the past 2 1/2 years and nearly filed for bankruptcy in April.

Chief executive Gerard Arpey said American was making good progress but that it was too early to declare victory. He noted that the third quarter with its summer vacation travel is peak season for airlines.

"Under normal circumstances, we should be doing much better at this time of year than simply breaking even," Arpey said. "We have a lot of work to do to achieve sustained profitability at acceptable levels, but we are clearly on the right track."

Despite the upbeat report, AMR shares fell $1.24, or 8.3 percent, to close at $13.66 yesterday on the New York Stock Exchange.

AMR's slim gain followed profitable reports from several other U.S. carriers in the past week, including Southwest and Northwest, and smaller losses at Delta and US Airways.

The AMR share plunge came on a day when other carriers saw their stock prices drop. The American Express airline index fell 4.1 percent. Helane Becker, an analyst with Benchmark Capital, said investors had expected better news after the profits at Continental and Northwest.

Excluding one-time gains and losses from downsizing, Fort Worth, Texas-based AMR said it would have lost $23 million, or 15 cents per share, in the most recent quarter. Analysts surveyed by Thomson First Call had expected a loss of 41 cents per share.

Company officials and outside analysts cautioned that American will have a difficult time in the slower fall and winter quarters.