American Airlines shares rise on fourth-quarter report

"Our customers are already experiencing the benefits of our combined network," American CEO Doug Parker said.
"Our customers are already experiencing the benefits of our combined network," American CEO Doug Parker said. (                        Getty Images)
Posted: January 30, 2014

Shares of American Airlines Group soared almost 6 percent Tuesday, as the recently merged US Airways-American reported fourth-quarter results that beat estimates.

The combined carrier, whose merger closed Dec. 9, said that passenger demand was strong and that "a number of network initiatives" would be introduced in coming months worth more than $400 million in annual earnings improvement.

The airline will begin the initiatives as soon as the technology is ready, American president Scott Kirby said during a fourth-quarter-earnings conference call.

The airline also plans to restructure flying out of its hubs in Miami, Chicago, and Dallas, and adjust aircraft size on some flights to better meet demand.

"It's very early to the merger, but we're off to a great start," said chief executive officer Doug Parker. "Our customers are already experiencing the benefits of our combined network, with more of it to come soon."

The new American, Philadelphia's dominant airline, reported a $2 billion loss for the fourth quarter, which included $2.4 billion in charges related to AMR Corp.'s emergence from bankruptcy protection and merger costs.

Excluding those charges, the combined profit for the new American was $436 million, compared with a year-earlier loss of $42 million. The adjusted profit was 59 cents per share, beating analysts' 55-cent consensus estimate.

Combined revenue was $10 billion, up 8.7 percent from the fourth quarter 2012. Passenger revenue was $8.7 billion, up 8.6 percent.

So far, customers can book select flights on both airlines, and frequent flier club and "elite" members have reciprocal benefits for early check-in, free checked bags, priority seating, and early boarding.

US Airways Dividend Miles members and American's AAdvantage fliers can earn and redeem miles when traveling on either airline's network.

American ended the fourth quarter with $10.3 billion in cash and investments, of which $1 billion was restricted.

American disclosed in a regulatory filing Monday that Parker would receive a salary of $700,000 this year and could get a bonus of twice that if the company earns $2.5 billion in pretax profit. Parker said the majority of his total compensation will come in the form of a stock award that the board will decide this year.

Separately, last month, Parker received a retention bonus of stock that could be worth $18.9 million (based on Monday's closing price) if certain merger goals are met by late 2016.

Officials reiterated that it will be late 2015 before the two airlines fully combine under a single operator certificate, ticket reservation system, and airplanes with the same paint job. The airline has selected the Sabre reservations system.

Shares of American closed up 5.9 percent to $31.96.


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