This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Parent of American Airlines Reduces Its Quarterly Loss July 17, 2003 By EDWARD WONG The AMR Corporation, the parent of American Airlines, said yesterday that its second-quarter loss had narrowed from a year earlier. The company's fortunes swung wildly from the fears surrounding the war in Iraq and the onset of severe acute respiratory syndrome to a pickup in passenger travel in June, when the airline managed to eke out a profit. Some analysts said the June profit and American's overall improved cash flow could signal a creeping recovery for the industry, though others remained skeptical. Some of American's fundamental measurements, like the average revenue per mile paid by each passenger, known as yield, were dismal, as business travelers flew less or bought bargain tickets. That is a bad sign for the traditional airlines. American reported a net loss of $75 million in the quarter, or 47 cents a share, compared with a net loss of $495 million in the 2002 period, or $3.19 a share. The loss in the quarter was on revenue of $4.3 billion. Excluding special gains and charges, the company had a net loss of $357 million, or $2.26 a share. The consensus among analysts was that American would have a loss of $2.65 a share this quarter, according to Thomson First Call. The special items included a $358 million cash payment from the federal government, which agreed earlier this year to reimburse airlines for security taxes imposed since the Sept. 11 attacks, and for other costs. American's earnings for the second-quarter 2002 included an income tax benefit that is absent from the numbers for this quarter. Excluding the benefit, American had a loss of $720 million in the second quarter of 2002, or $4.64 a share, on revenue of $4.5 billion. Shares of AMR rose $1.10, to $11.66. "You're probably never out of the woods, but we've come a long ways," said Gerard J. Arpey, the chief executive of American. As recently as May, American said in a securities filing that it might have to file for bankruptcy protection. But yesterday, Mr. Arpey, who started his job in April, said that executives were no longer "talking explicitly" about the possibility of a bankruptcy filing. American also said yesterday that it was shrinking its St. Louis hub considerably and that it would lay off 1,650 workers from the airport and 540 from a reservations office in the city that it is closing. The 1,650 airport workers include 350 mechanics and engineers. Flights will also be cut. Operations in St. Louis will have shrunk by November to 207 daily flights, including ones on regional jets. American acquired the hub when it bought Trans World Airlines in 2001. Yesterday, Mr. Arpey said it had been difficult to make the hub profitable. On a brighter note, the company said it had $2.7 billion in cash as of yesterday, $250 million of that raised through financing backed by some of American's last unfettered aircraft. At the end of the first quarter, American had $1.8 billion in cash. "I'm pretty impressed with their cash position at this point," said Jim Corridore, an analyst at Standard & Poor's. "There's no risk of bankruptcy in the near term." But there is still grim news. Jeff Campbell, American's chief financial officer, said passenger yield dropped 1.7 percent compared with the second quarter of 2002. Mr. Arpey said that "there still does not seem to be any pricing power in the industry." Jamie N. Baker, an analyst at J. P. Morgan Chase, said that "we're disappointed that most of AMR's cost goals will be achieved by the end of this year while revenue appears stalled at 1997 levels." http://www.nytimes.com/2003/07/17/business/17XAIR.html?ex=1059446925&ei=1&en=2f9955462ad5ab81 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company