AMR Corporation (NYSE: AMR) is a commercial aviation business and airline holding company based in Fort Worth, Texas, United States.[2] Formed in 1982, as part of American Airlines's reorganization, its name derives from American Airlines's ticker symbol on the New York Stock Exchange. AMR Corporation is one of the very few larger passenger and legacy carrier airline businesses, which have not become insolvent or had to file for Chapter 11 reorganization bankruptcy during its corporate history, indicative of its success as an airline based corporate and business entity. In addition to American Airlines, AMR owns TWA Airlines LLC, (formerly Trans World Airlines) and regional airlines American Eagle Airlines, successor to Simmons Airlines, and Executive Airlines by way of AMR Eagle Holdings Corporation. Chautauqua Airlines flown in conjunction with American Airlines marketing brand, known as AmericanConnection, are independent of AMR Corporation's divisions and subsidiaries, but do operate in conjunction with them in order to provide seamless connections to AMRs two principal airline holdings. AMR's and AA's Chairperson, President, and CEO is Gerard Arpey.
AMR Corporation (AMR), incorporated in October 1982, operates in the airline industry. The Company’s principal subsidiary is American Airlines, Inc. (American). As of December 31, 2009, American provided scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. AMR Eagle Holding Corporation (AMR Eagle), a wholly owned subsidiary of AMR, owns two regional airlines, which do business as American Eagle - American Eagle Airlines, Inc. and Executive Airlines, Inc. (Executive) (collectively, the American Eagle carriers). American also contracts with an independently owned regional airline, which does business as AmericanConnection (the AmericanConnection carrier).
As of December 31, 2009, American, AMR Eagle and the AmericanConnection airline served approximately 250 cities in 40 countries with, on average, more than 3,400 daily flights. As of December 31, 2009, the combined network fleet consisted of approximately 900 aircrafts. American provides a range of freight and mail services to shippers throughout its system onboard American’s passenger fleet. As of December 31, 2009, AMR Eagle operated over 1,500 daily departures, offering scheduled passenger service to over 150 destinations in North America, Mexico and the Caribbean. American operates in five primary markets: Dallas/Fort Worth, Chicago O'Hare, Miami, New York City and Los Angeles. The AmericanConnection carrier provides connecting service to American through St. Louis. The Company provides international service to the Caribbean, Canada, Latin America, Europe and Asia. The Company's operating revenues from foreign operations (flights serving international destinations) were approximately 40% of its total operating revenues during the year ended December 31, 2009.
To improve access to each other's markets, American has established marketing relationships with other airlines and rail companies. American has marketing relationships with Air Pacific, Air Tahiti Nui, Alaska Airlines, British Airways, Brussels Airlines, Cathay Pacific, China Eastern Airlines, Dragonair, Deutsche Bahn German Rail, EL AL, Etihad Airways, EVA Air, Finnair, GOL, Gulf Air, Hawaiian Airlines, Iberia, JAL, Jet Airways, LAN (includes LAN Airlines, LAN Argentina, LAN Ecuador and LAN Peru), Malev Hungarian Airlines, Mexicana, Qantas Airways, Royal Jordanian, SNCF French Rail and Vietnam Airlines. American is a founding member of oneworld Alliance, which includes British Airways, Cathay Pacific, Finnair, LAN Airlines, Iberia, Qantas, JAL, Malev Hungarian, Mexicana and Royal Jordanian. The oneworld alliance links the networks of the member carriers, and provides connections to the destinations served by the alliance, including linking the carriers' frequent flyer programs and access to the carriers' airport lounge facilities. Together, oneworld members serve nearly 700 destinations in approximately 150 countries, with more than 8,000 daily departures.
American has established the AAdvantage frequent flyer program (AAdvantage). AAdvantage members earn mileage credits by flying on American, American Eagle and the AmericanConnection carrier or by using services of other participants in the AAdvantage program. Mileage credits can be redeemed for free, discounted or upgraded travel on American, American Eagle or other participating airlines, or for other awards. American sells mileage credits and related services to other participants in the AAdvantage program. There are over 1,000 program participants, including a credit card issuer, hotels, car rental companies, and other products and services companies in the AAdvantage program. As of December 31, 2009, AAdvantage had approximately 64 million total members.
The Company competes with AirTran Airways, Alaska Airlines, Continental Airlines, Inc., Delta Air Lines, Inc., Frontier Airlines, JetBlue Airways, Hawaiian Airlines, Southwest Airlines, Spirit Airlines, United Air Lines, Inc., US Airways and Virgin America Airlines.
Key developments in the late 1990s included alliances and divestments. One of the most important trends in the airline industry in the 1990s was that of global alliance building. In 1996 American Airlines and British Airways plc announced that they would form an alliance in which the two airlines would virtually operate as a single unit on North Atlantic runs. The plan, however, ran into severe regulatory problems, including a stipulation by the U.S. government that an "open skies" treaty between the United States and Britain precede any granting of antitrust immunity to the British Airways-American link-up. By late 1998 the open skies negotiations had ground to a halt. As it became more likely that the alliance with British Airways might never get off the ground, American Airlines shifted gears and announced in September 1998 the formation of the oneworld alliance. Oneworld initially included American, British Airways, Canadian Airlines, Hong Kong's Cathay Pacific Airways, and Australia's Qantas Airways, with the partners agreeing to link their frequent-flier programs and give each other access to their airport lounge facilities. Finnair and Spain's Iberia were slated to join oneworld in 1999, and Linea Aerea Nacional de Chile (LanChile) agreed to become the eighth member starting in 2000. American also entered into a separate bilateral marketing alliance with US Airways in April 1998, again involving linked frequent-flier programs and reciprocal airport lounge facility access.
In September 1998 AMR announced that it would sell three subsidiaries that had been part of the Management Services Group in order to focus on its core airlines businesses. By the end of the year the company had reached agreements to sell all three, with AMR Combs Inc., an executive aviation services company, going to BBA Group plc of the United Kingdom for $170 million; TeleService Resources, a telemarketing firm, sold to Platinum Equity Holdings; and AMR Services, a ground services and cargo logistics unit, bought by New York merchant bank Castle Harlan. These divestments left AMR with two main lines of business: the Airline Group, which consisted of American Airlines and the American Eagle regional airline operations; and the Sabre Group, in which AMR held an 82.4 percent stake at the end of 1998.
American Airlines continued to be beset by labor troubles throughout the 1990s, including a brief strike by pilots in 1997 which ended after President Bill Clinton intervened, appointing a presidential emergency board to resolve the dispute through imposition of a new contract (under this pressure, the two sides soon reached their own agreement). When Crandall retired in May 1998, it appeared that better relations with labor might be on tap. Crandall's successor as chairman and CEO was Donald J. Carty, who had been president (a title he retained). Around the time of his promotion, Carty was quoted as having told union leaders that he planned to focus on employees because "happy employees make for happy customers, which make for happy shareholders." But trouble erupted following the December 1998 acquisition by AMR of low-cost carrier Reno Air, Inc. for $124 million. Reno Air had 27 planes in its fleet and hub cities in Reno, Nevada, and San Jose, California. Rather than operating it as a low-cost "airline-within-an-airline," AMR aimed to integrate Reno into American Airlines, thereby strengthening American's presence in the western United States. But when American attempted to integrate pilots from Reno Air without immediately giving pay raises to those Reno pilots moving into higher paying positions at American, members of the American Pilots Association (APA) began a sickout in early February 1999 that forced thousands of flight cancellations and crippled the airline. AMR sued the APA, winning a restraining order and an order for a return to work. After the pilots defied this order, a U.S. district judge found the union and its top two leaders in contempt of court for ignoring his order. This ended the sickout, but not before the eight-day action had cost AMR an estimated $150 million in lost business. In late February American and the APA agreed to attempt to resolve their dispute through nonbinding arbitration.
During 1999 American Airlines took delivery of 44 new airplanes, adding the Boeing 737 and 777 to its fleet. It was also in the midst of a $400 million program to overhaul the interiors of its 639-plane fleet, the first such change in 20 years. Sabre, meantime, rode the Internet wave of the late 1990s through Travelocity.com, its travel web site that was one of the leading sites for the purchase of airline tickets. These positive developments were tempered, however, by an antitrust lawsuit filed against American Airlines by the U.S. Department of Justice in May 1999. The Justice Department charged that the airliner in the mid-1990s had slashed fares upon the entry of low-cost rivals into its Dallas/Fort Worth hub, incurring losses in the process until the smaller competitors had been forced out. Following the departure of a rival, American would then raise fares and sometimes reduce service. American Airlines immediately responded with a vigorous denial of the charges, setting the stage for what could be a lengthy, contentious, and precedent-setting lawsuit--a lawsuit that was just one of the many challenges facing AMR at the end of the century.
AMR sold its remaining 82 percent stake in the Sabre computer reservations system group in March 2000. Travelocity, in which Sabre held a 70 percent stake, led all online ticket sales agencies with $1 billion in 1999 bookings. Sabre also provided American's IT services, and had contracts to do so until 2008.
In the summer of 2000, AMR pursued Northwest Airlines with a merger proposal. The company balked at NWA's high asking price, however. In January 2001, American announced a deal to buy ailing TWA and part of US Airways, which was being absorbed by United Airlines. AMR paid $742 million for TWA, which had been the eighth largest airline in the United States. The acquisition made American the world's largest airline, ahead of United. American agreed to hire most of TWA's 20,000 workers in the transaction.
American Airlines and British Airways had applied for antitrust immunity similar to what allowed KLM and Northwest to cooperate so closely, and effectively. U.S. authorities refused to grant this status to British Airways and American without the two giving up landing slots in London to rivals, and American withdrew its application in February 2002.
A New Environment in the New Millennium
AMR's total operating revenues were $19.7 billion in 2000, resulting in net earnings of $770 million. The year 2001 began poorly for AMR, however, like most U.S. airlines, and continued to get worse. The traditionally strong second quarter--AMR had made a net profit of $285 million a year earlier--saw a loss of $105 million at AMR. A drop in business travel was the main cause.
American lost two aircraft full of passengers and 36 employees in the September 11 hijackings. The FAA banned all civil air operations in the two days following the tragedy, which stranded American planes and passengers at various airports, and delayed the deployment of the company's crisis management team. When thousands of flight crew members felt unable to fly, their unions relaxed their rules and allowed others to give up their own time off to take their place. The crash of American Airlines Flight 587 upon takeoff from JFK Airport in November 2001 added further trauma to a horrific year.
The two-day flying suspension and a drop-off in passenger traffic and ticket prices following the attacks in New York and at the Pentagon hurt most of the major airlines. AMR soon cut its capacity 20 percent, but still lost about $600 million in revenue in the last 20 days of September alone. AMR posted a record quarterly operating loss of $414 million in the third quarter, in spite of $508 million in government aid.
AMR posted a full-year net loss of $1.8 billion on total operating revenues of $19 billion in 2001. The company reduced the workforce by 20 percent, or 20,000 employees. Capital spending for 2002 was reduced 40 percent, from a planned $3.5 billion.
The airline simplified its fleet, retiring its MD-11, MD-90, DC-10, MD-87, and DC airliners in 2001. The fleet numbered 712 planes at the end of the year. In mid-2002, American retired its short-haul Boeing 717 fleet, acquired from the TWA takeover, in favor of the similar-sized Fokker F100s already in its fleet. The carrier aimed to operate only seven types of aircraft by the end of the year, down from 14 in 2000. Soon, the Fokkers also were added to the list of planes to be retired.
American lost $1.1 billion in the first half of 2002--a quarter of the amount lost by all U.S. airlines--and lost another $924 million in the third quarter alone. As business travelers disappeared, management was trying to adopt the budget airline methodology of such carriers as Southwest Airlines Co. It removed magazines from planes and skipped meals on flights of less than four hours. Arrivals and departures schedules were rearranged for efficiency, resulting in longer layovers. American's hub-and-spoke system, large and unionized workforce, and other manifestations of the archetypical full-service airline, however, were deeply entrenched in the company's culture. CEO Donald Carty told the Wall Street Journal the airline was looking for a middle ground "neither preoccupied solely with cost nor solely with revenue."
A sweeping overhaul was announced in August 2002. The company was cutting another 7,000 jobs. First-class service was removed on most flights, with the exception of major international routes. Economic instability in Latin America, an American Airlines stronghold, added to the considerable challenges the carrier was facing. The world's largest airline was still among the strongest financially, but AMR was still searching for a way to thrive in a dramatically different industry from the one it dominated for much of the 20th century.
Principal Subsidiaries: American Airlines, Inc.; American Eagle Airlines, Inc.; AMR Investment Services.
Principal Divisions: Passenger-American Airlines; TWA LLC; AMR Eagle; Cargo.
Principal Competitors: Continental Airlines, Inc.; Delta Air Lines, Inc.; Southwest Airlines Co.; UAL Corporation.
OVERALL
Beta: 1.45
Market Cap (Mil.): $1,957.42
Shares Outstanding (Mil.): 333.46
Annual Dividend: --
Yield (%): --
FINANCIALS
AMR Industry Sector
P/E (TTM): -- 3.42 15.79
EPS (TTM): 76.01 -- --
ROI: -2.32 1.49 2.81
ROE: -- 3.93 5.15
Key Dates:
1930: American Airways Company is formed from a number of smaller airlines and related businesses.
1934: American Airways is renamed American Airlines; the company gains an airmail contract.
1950: American Airlines sells flying boat routes from newly acquired American Export Airlines to Pan Am.
1953: DC-7s allow American to launch nonstop transcontinental flights.
1959: American begins operating its first jets, Boeing 707s.
1978: American posts a record profit of $134 million; American adopts two-tier wage policy.
1979: American relocates its headquarters from New York to Dallas-Fort Worth.
1982: AMR Corporation is formed as the parent company of American Airlines.
1998: American forms oneworld alliance with several world airlines.
2000: The Sabre Group is spun off.
2001: American buys TWA; two jets carrying a full load of passengers and crew are lost in the September 11 terrorist hijackings.
2002: Major restructuring is underway.
Statistics:
Public Company
Incorporated: 1934 as American Airlines, Inc.
Employees: 122,820
Sales: $18.96 billion (2001)
Stock Exchanges: New York
Ticker Symbol: AMR
NAIC: 481111 Scheduled Passenger Air Transportation; 561599 Reservation Services
Name Age Since Current Position
Arpey, Gerard 52 2010 Chairman of the Board, Chief Executive Officer
Horton, Thomas 49 2010 President
Goren, Isabella 50 2010 Chief Financial Officer, Senior Vice President
Garton, Daniel 53 2010 Executive Vice President; President and Chief Executive Officer of American Eagle
Reding, Robert 61 2007 Executive Vice President; Executive Vice President – Operations of American
Kennedy, Gary 55 2003 Senior Vice President, General Counsel, Chief Compliance Officer
Codina, Armando 64 2007 Lead Director
Boren, David 69 1994 Director
Rodin, Judith 66 1997 Director
Purcell, Philip 66 2000 Director
Miles, Michael 71 2000 Director
Bachmann, John 71 2001 Director
Staubach, Roger 69 2001 Director
Rose, Matthew 51 2004 Director
Korologos, Ann 69 1990 Director
Robinson, Ray 63 2005 Director
Ibarguen, Alberto 67 2008 Director
Address:
4333 Amon Carter Boulevard
Fort Worth, Texas 86155
U.S.A.
AMR Corporation (AMR), incorporated in October 1982, operates in the airline industry. The Company’s principal subsidiary is American Airlines, Inc. (American). As of December 31, 2009, American provided scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. AMR Eagle Holding Corporation (AMR Eagle), a wholly owned subsidiary of AMR, owns two regional airlines, which do business as American Eagle - American Eagle Airlines, Inc. and Executive Airlines, Inc. (Executive) (collectively, the American Eagle carriers). American also contracts with an independently owned regional airline, which does business as AmericanConnection (the AmericanConnection carrier).
As of December 31, 2009, American, AMR Eagle and the AmericanConnection airline served approximately 250 cities in 40 countries with, on average, more than 3,400 daily flights. As of December 31, 2009, the combined network fleet consisted of approximately 900 aircrafts. American provides a range of freight and mail services to shippers throughout its system onboard American’s passenger fleet. As of December 31, 2009, AMR Eagle operated over 1,500 daily departures, offering scheduled passenger service to over 150 destinations in North America, Mexico and the Caribbean. American operates in five primary markets: Dallas/Fort Worth, Chicago O'Hare, Miami, New York City and Los Angeles. The AmericanConnection carrier provides connecting service to American through St. Louis. The Company provides international service to the Caribbean, Canada, Latin America, Europe and Asia. The Company's operating revenues from foreign operations (flights serving international destinations) were approximately 40% of its total operating revenues during the year ended December 31, 2009.
To improve access to each other's markets, American has established marketing relationships with other airlines and rail companies. American has marketing relationships with Air Pacific, Air Tahiti Nui, Alaska Airlines, British Airways, Brussels Airlines, Cathay Pacific, China Eastern Airlines, Dragonair, Deutsche Bahn German Rail, EL AL, Etihad Airways, EVA Air, Finnair, GOL, Gulf Air, Hawaiian Airlines, Iberia, JAL, Jet Airways, LAN (includes LAN Airlines, LAN Argentina, LAN Ecuador and LAN Peru), Malev Hungarian Airlines, Mexicana, Qantas Airways, Royal Jordanian, SNCF French Rail and Vietnam Airlines. American is a founding member of oneworld Alliance, which includes British Airways, Cathay Pacific, Finnair, LAN Airlines, Iberia, Qantas, JAL, Malev Hungarian, Mexicana and Royal Jordanian. The oneworld alliance links the networks of the member carriers, and provides connections to the destinations served by the alliance, including linking the carriers' frequent flyer programs and access to the carriers' airport lounge facilities. Together, oneworld members serve nearly 700 destinations in approximately 150 countries, with more than 8,000 daily departures.
American has established the AAdvantage frequent flyer program (AAdvantage). AAdvantage members earn mileage credits by flying on American, American Eagle and the AmericanConnection carrier or by using services of other participants in the AAdvantage program. Mileage credits can be redeemed for free, discounted or upgraded travel on American, American Eagle or other participating airlines, or for other awards. American sells mileage credits and related services to other participants in the AAdvantage program. There are over 1,000 program participants, including a credit card issuer, hotels, car rental companies, and other products and services companies in the AAdvantage program. As of December 31, 2009, AAdvantage had approximately 64 million total members.
The Company competes with AirTran Airways, Alaska Airlines, Continental Airlines, Inc., Delta Air Lines, Inc., Frontier Airlines, JetBlue Airways, Hawaiian Airlines, Southwest Airlines, Spirit Airlines, United Air Lines, Inc., US Airways and Virgin America Airlines.
Key developments in the late 1990s included alliances and divestments. One of the most important trends in the airline industry in the 1990s was that of global alliance building. In 1996 American Airlines and British Airways plc announced that they would form an alliance in which the two airlines would virtually operate as a single unit on North Atlantic runs. The plan, however, ran into severe regulatory problems, including a stipulation by the U.S. government that an "open skies" treaty between the United States and Britain precede any granting of antitrust immunity to the British Airways-American link-up. By late 1998 the open skies negotiations had ground to a halt. As it became more likely that the alliance with British Airways might never get off the ground, American Airlines shifted gears and announced in September 1998 the formation of the oneworld alliance. Oneworld initially included American, British Airways, Canadian Airlines, Hong Kong's Cathay Pacific Airways, and Australia's Qantas Airways, with the partners agreeing to link their frequent-flier programs and give each other access to their airport lounge facilities. Finnair and Spain's Iberia were slated to join oneworld in 1999, and Linea Aerea Nacional de Chile (LanChile) agreed to become the eighth member starting in 2000. American also entered into a separate bilateral marketing alliance with US Airways in April 1998, again involving linked frequent-flier programs and reciprocal airport lounge facility access.
In September 1998 AMR announced that it would sell three subsidiaries that had been part of the Management Services Group in order to focus on its core airlines businesses. By the end of the year the company had reached agreements to sell all three, with AMR Combs Inc., an executive aviation services company, going to BBA Group plc of the United Kingdom for $170 million; TeleService Resources, a telemarketing firm, sold to Platinum Equity Holdings; and AMR Services, a ground services and cargo logistics unit, bought by New York merchant bank Castle Harlan. These divestments left AMR with two main lines of business: the Airline Group, which consisted of American Airlines and the American Eagle regional airline operations; and the Sabre Group, in which AMR held an 82.4 percent stake at the end of 1998.
American Airlines continued to be beset by labor troubles throughout the 1990s, including a brief strike by pilots in 1997 which ended after President Bill Clinton intervened, appointing a presidential emergency board to resolve the dispute through imposition of a new contract (under this pressure, the two sides soon reached their own agreement). When Crandall retired in May 1998, it appeared that better relations with labor might be on tap. Crandall's successor as chairman and CEO was Donald J. Carty, who had been president (a title he retained). Around the time of his promotion, Carty was quoted as having told union leaders that he planned to focus on employees because "happy employees make for happy customers, which make for happy shareholders." But trouble erupted following the December 1998 acquisition by AMR of low-cost carrier Reno Air, Inc. for $124 million. Reno Air had 27 planes in its fleet and hub cities in Reno, Nevada, and San Jose, California. Rather than operating it as a low-cost "airline-within-an-airline," AMR aimed to integrate Reno into American Airlines, thereby strengthening American's presence in the western United States. But when American attempted to integrate pilots from Reno Air without immediately giving pay raises to those Reno pilots moving into higher paying positions at American, members of the American Pilots Association (APA) began a sickout in early February 1999 that forced thousands of flight cancellations and crippled the airline. AMR sued the APA, winning a restraining order and an order for a return to work. After the pilots defied this order, a U.S. district judge found the union and its top two leaders in contempt of court for ignoring his order. This ended the sickout, but not before the eight-day action had cost AMR an estimated $150 million in lost business. In late February American and the APA agreed to attempt to resolve their dispute through nonbinding arbitration.
During 1999 American Airlines took delivery of 44 new airplanes, adding the Boeing 737 and 777 to its fleet. It was also in the midst of a $400 million program to overhaul the interiors of its 639-plane fleet, the first such change in 20 years. Sabre, meantime, rode the Internet wave of the late 1990s through Travelocity.com, its travel web site that was one of the leading sites for the purchase of airline tickets. These positive developments were tempered, however, by an antitrust lawsuit filed against American Airlines by the U.S. Department of Justice in May 1999. The Justice Department charged that the airliner in the mid-1990s had slashed fares upon the entry of low-cost rivals into its Dallas/Fort Worth hub, incurring losses in the process until the smaller competitors had been forced out. Following the departure of a rival, American would then raise fares and sometimes reduce service. American Airlines immediately responded with a vigorous denial of the charges, setting the stage for what could be a lengthy, contentious, and precedent-setting lawsuit--a lawsuit that was just one of the many challenges facing AMR at the end of the century.
AMR sold its remaining 82 percent stake in the Sabre computer reservations system group in March 2000. Travelocity, in which Sabre held a 70 percent stake, led all online ticket sales agencies with $1 billion in 1999 bookings. Sabre also provided American's IT services, and had contracts to do so until 2008.
In the summer of 2000, AMR pursued Northwest Airlines with a merger proposal. The company balked at NWA's high asking price, however. In January 2001, American announced a deal to buy ailing TWA and part of US Airways, which was being absorbed by United Airlines. AMR paid $742 million for TWA, which had been the eighth largest airline in the United States. The acquisition made American the world's largest airline, ahead of United. American agreed to hire most of TWA's 20,000 workers in the transaction.
American Airlines and British Airways had applied for antitrust immunity similar to what allowed KLM and Northwest to cooperate so closely, and effectively. U.S. authorities refused to grant this status to British Airways and American without the two giving up landing slots in London to rivals, and American withdrew its application in February 2002.
A New Environment in the New Millennium
AMR's total operating revenues were $19.7 billion in 2000, resulting in net earnings of $770 million. The year 2001 began poorly for AMR, however, like most U.S. airlines, and continued to get worse. The traditionally strong second quarter--AMR had made a net profit of $285 million a year earlier--saw a loss of $105 million at AMR. A drop in business travel was the main cause.
American lost two aircraft full of passengers and 36 employees in the September 11 hijackings. The FAA banned all civil air operations in the two days following the tragedy, which stranded American planes and passengers at various airports, and delayed the deployment of the company's crisis management team. When thousands of flight crew members felt unable to fly, their unions relaxed their rules and allowed others to give up their own time off to take their place. The crash of American Airlines Flight 587 upon takeoff from JFK Airport in November 2001 added further trauma to a horrific year.
The two-day flying suspension and a drop-off in passenger traffic and ticket prices following the attacks in New York and at the Pentagon hurt most of the major airlines. AMR soon cut its capacity 20 percent, but still lost about $600 million in revenue in the last 20 days of September alone. AMR posted a record quarterly operating loss of $414 million in the third quarter, in spite of $508 million in government aid.
AMR posted a full-year net loss of $1.8 billion on total operating revenues of $19 billion in 2001. The company reduced the workforce by 20 percent, or 20,000 employees. Capital spending for 2002 was reduced 40 percent, from a planned $3.5 billion.
The airline simplified its fleet, retiring its MD-11, MD-90, DC-10, MD-87, and DC airliners in 2001. The fleet numbered 712 planes at the end of the year. In mid-2002, American retired its short-haul Boeing 717 fleet, acquired from the TWA takeover, in favor of the similar-sized Fokker F100s already in its fleet. The carrier aimed to operate only seven types of aircraft by the end of the year, down from 14 in 2000. Soon, the Fokkers also were added to the list of planes to be retired.
American lost $1.1 billion in the first half of 2002--a quarter of the amount lost by all U.S. airlines--and lost another $924 million in the third quarter alone. As business travelers disappeared, management was trying to adopt the budget airline methodology of such carriers as Southwest Airlines Co. It removed magazines from planes and skipped meals on flights of less than four hours. Arrivals and departures schedules were rearranged for efficiency, resulting in longer layovers. American's hub-and-spoke system, large and unionized workforce, and other manifestations of the archetypical full-service airline, however, were deeply entrenched in the company's culture. CEO Donald Carty told the Wall Street Journal the airline was looking for a middle ground "neither preoccupied solely with cost nor solely with revenue."
A sweeping overhaul was announced in August 2002. The company was cutting another 7,000 jobs. First-class service was removed on most flights, with the exception of major international routes. Economic instability in Latin America, an American Airlines stronghold, added to the considerable challenges the carrier was facing. The world's largest airline was still among the strongest financially, but AMR was still searching for a way to thrive in a dramatically different industry from the one it dominated for much of the 20th century.
Principal Subsidiaries: American Airlines, Inc.; American Eagle Airlines, Inc.; AMR Investment Services.
Principal Divisions: Passenger-American Airlines; TWA LLC; AMR Eagle; Cargo.
Principal Competitors: Continental Airlines, Inc.; Delta Air Lines, Inc.; Southwest Airlines Co.; UAL Corporation.
OVERALL
Beta: 1.45
Market Cap (Mil.): $1,957.42
Shares Outstanding (Mil.): 333.46
Annual Dividend: --
Yield (%): --
FINANCIALS
AMR Industry Sector
P/E (TTM): -- 3.42 15.79
EPS (TTM): 76.01 -- --
ROI: -2.32 1.49 2.81
ROE: -- 3.93 5.15
Key Dates:
1930: American Airways Company is formed from a number of smaller airlines and related businesses.
1934: American Airways is renamed American Airlines; the company gains an airmail contract.
1950: American Airlines sells flying boat routes from newly acquired American Export Airlines to Pan Am.
1953: DC-7s allow American to launch nonstop transcontinental flights.
1959: American begins operating its first jets, Boeing 707s.
1978: American posts a record profit of $134 million; American adopts two-tier wage policy.
1979: American relocates its headquarters from New York to Dallas-Fort Worth.
1982: AMR Corporation is formed as the parent company of American Airlines.
1998: American forms oneworld alliance with several world airlines.
2000: The Sabre Group is spun off.
2001: American buys TWA; two jets carrying a full load of passengers and crew are lost in the September 11 terrorist hijackings.
2002: Major restructuring is underway.
Statistics:
Public Company
Incorporated: 1934 as American Airlines, Inc.
Employees: 122,820
Sales: $18.96 billion (2001)
Stock Exchanges: New York
Ticker Symbol: AMR
NAIC: 481111 Scheduled Passenger Air Transportation; 561599 Reservation Services
Name Age Since Current Position
Arpey, Gerard 52 2010 Chairman of the Board, Chief Executive Officer
Horton, Thomas 49 2010 President
Goren, Isabella 50 2010 Chief Financial Officer, Senior Vice President
Garton, Daniel 53 2010 Executive Vice President; President and Chief Executive Officer of American Eagle
Reding, Robert 61 2007 Executive Vice President; Executive Vice President – Operations of American
Kennedy, Gary 55 2003 Senior Vice President, General Counsel, Chief Compliance Officer
Codina, Armando 64 2007 Lead Director
Boren, David 69 1994 Director
Rodin, Judith 66 1997 Director
Purcell, Philip 66 2000 Director
Miles, Michael 71 2000 Director
Bachmann, John 71 2001 Director
Staubach, Roger 69 2001 Director
Rose, Matthew 51 2004 Director
Korologos, Ann 69 1990 Director
Robinson, Ray 63 2005 Director
Ibarguen, Alberto 67 2008 Director
Address:
4333 Amon Carter Boulevard
Fort Worth, Texas 86155
U.S.A.