American Airlines parent AMR Corp. said Wednesday a massive restructuring plan helped the world’s largest airline slash its first-quarter loss by about 84 percent from a year ago, when it teetered on the brink of bankruptcy.
Investors were heartened by the improved trend during the quarter, reflected by a $30 million net profit during the month of March, which sent AMR shares up more than 9 percent on Wednesday.
“The market is feeling much better about them, better than other legacy carriers -- they have some control over their destiny and that the cost-cutting is really going to start working here soon with the help of the economy,” said Ray Neidl, airline analyst at Blaylock & Partners.
The Fort Worth, Texas-based airline posted a loss of $166 million, or $1.03 a share, in the first three months of this year, compared with a loss of more than $1 billion a year ago.
American joined a number of other major airlines posting losses for the quarter, while airlines such as Southwest and America West tallied narrow profits.
American said its mainline unit costs dropped more than 16 percent in the first quarter from a year ago. The airline’s leaders said they will leave no stone unturned in finding ways to cut costs.
The airline said soaring fuel prices in the quarter hurt its financial performance, adding its fuel expense increased $55 million from a year ago for the quarter.
“Without the negative impact of rising fuel prices, our progress would have been even more dramatic, with a year-over-year decline in mainline unit costs (holding fuel prices at first quarter 2003 levels) of more than 17 percent,” said Gerard Arpey, AMR’s chief executive, who took office about a year ago.
The company faced a possible $400 million in added fuel expenses this year due to soaring oil prices, James Beer, AMR’s chief financial officer, told Reuters earlier this month.
AMR has undertaken a massive restructuring plan aimed at slashing $4 billion a year in its costs. Arpey said the airline is still looking everywhere to cut more costs, for example, having staff clean the toilets on 757s rather than contract out for the work.
“We’re looking for every penny we can find and if it means cleaning the toilets ourselves, we will do it,” Arpey said.