American Airlines’ Parent Notches Record July Profits

by William White | August 27, 2013 12:16 pm

[1]AMR (AAMRQ[2]), the parent company of American Airlines, had record breaking profits of $292 million in July.

AMR cites a 6% increase in sales from last year as the reason for the record profits. The company brought in $2.48 billion in profits through sales. AMR also saw profits increase due to a $74 million drop in labor cost when compared to July last year. This resulted in the company having $6.76 billion in cash and short-term investments, which is up more than $1 billion from July 2012. The company’s July profits, which totaled $352 million before reorganization expenses, almost matched its second-quarter earning of $357 million. AMR is looking to move out of its Chapter 11 bankruptcy protection by completing an $11 billion merger with US Airways (LCC[3]). However, the Department of Justice decided earlier this month that it would try to block the merger in court. The airlines want the trial to begin on Nov. 12, but the DOJ is pushing to have the trail start on Feb. 10. AMR may be forced to come out of bankruptcy before its merger with US Airways due to the trial, reports The Street.

AMR’s strong earnings in July could work against the airline’s attempt to move out of bankruptcy through its merger with US Airways. Both airlines claim that they need the merger to stay in business, but the DOJ believes that the companies are earning enough profit that the merger isn’t justifiable. The DOJ claims that the merger would cost fliers, who would have to pay higher fares and fees, reports Star-Telegram.

AAMRQ shares were down 3% as of midday Tuesday. LLC shares were down 5% as of midday Tuesday.

Source URL: https://investorplace.com/2013/08/american-airlines-parent-notches-record-july-profits/

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