Air Transport World

U.S. majors.(special section: 1994 World Airline Report)

American: Although 1994 "was a much more satisfactory year than 1993," AMR Corp. Chairman Robert Crandall said, announcing strong profits, it should have been "truly outstanding," given favorable factors such as strengthening world economies and low fuel prices. "The fact that it was not was primarily a result of continuing pressure on [domestic] prices and underscores the need to press ahead with our cost-reduction efforts" under the Transition Plan implemented in the early 1990s.

AMR has announced its intention to cut expenses by $1 billion annually but its efforts to negotiate cost-saving contracts with its employee groups failed again in 1994. This was seen as a factor in Crandall's decision early this year to turn over the presidency of the Air Transportation Group to longtime Executive VP-Finance Donald Carty. "If the labor unions wanted someone new to talk to, they now have it," Crandall said.

By the end of 1995, Crandall wrote in AMR's annual report, the company hopes that "the Transition Plan, which has served us well, will be replaced by a new strategic plan focused on our vision of American Airlines as America's most successful airline. ... If we can successfully negotiate competitive labor agreements, American's future should be very bright."

Last year saw the beginning of the end for American's Raleigh/ Durham hub, where Midway Airlines is stepping into the void in an arrangement similar to that entered into with Reno Air at San Jose in 1993. Meanwhile, frequencies were boosted substantially at American's DFW, Chicago and Miami hubs, and service was reduced to 16 "not sufficiently profitable" cities. Final governmental approvals were gained for AMR's alliance with Canadian Airlines International and extensive code sharing will begin this summer. A tragic note was sounded by two fatal accidents at the American Eagle subsidiary and the subsequent temporary grounding of its ATR fleet.

AMR's Transportation Group, composed of American Airlines, American Eagle and American Cargo, posted operating income of $586 million, up from $374 million in 1993, and a net loss of $7 million, down from $314 million, on a 0.7% rise in revenues to $14.9 billion. The always profitable Sabre Group had a pretax income of $342 million, up from $184 million, on $1.5 billion in revenues.

AMR Corp. recorded operating income of just over $1 billion on a 2% rise in revenues to $16.1 billion. Net income was $402 million before restructuring charges and $228 million after, vs. a net loss of $110 million in 1993. The earnings were sufficient to trigger payments under profit-sharing plans, for the first time since 1989.

Passenger boardings dipped 1.8% to 81,085,935 but RPKs rose 1.8% to 159 billion and FTKs leapt just under 10% to 2.36 billion. Load factor gained 4.4 points to 64.8%. Biggest gains in passenger traffic came on international routes, where enplanements were up 5.7% and RPKs advanced 5.3%. Yield was down to 12. …

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