AMR sees unit rev up between 7.1 to 8.1 pct

[MiAAmi]

AMR sees unit rev up between 7.1 to 8.1 pct
Mon Sep 25, 2006 5:43pm ET


NEW YORK, Sept 25 (Reuters) - AMR Corp. (AMR.N: Quote, Profile, Research), parent of American Airlines, said on Monday its third-quarter consolidated unit revenue is expected to increase between 7.1 percent and 8.1 percent year over year.

It said in a regulatory filing the revenue estimate includes more than $50 million in total impact for August and September related to the London security threat in August.

It said its third-quarter mainline unit revenue is expected to increase between 6.6 percent and 7.6 percent year over year.




© Reuters 2006. All Rights Reserved.

 

[TIME FOR CHANGE]

50 million for the security threat in london.
I would like to see the cost break down for that.

Sounds like AA covered the bill fo BA also

 

[jersey777]

I believe there has been a drastic cost associated with London flights. I work jfk-lhr frequently and the loads, especially in business and first, have dropped off significantly. There were several flights each day cancelled in August. The loads have seemed to level off as some of the restrictions and panic have subsided. One positive note is that AMR has revised its fuel costs estimates and this should more then offsets the costs associated with the terroists threats in London. Go to Dallasnews.com and see the full story.

 

[jimntx]

50 million for the security threat in london.
I would like to see the cost break down for that.

Sounds like AA covered the bill fo BA also

It doesn't say costs restricted to LHR, it says costs associated with LHR security issue.

All of the U.S. domestic flights delayed that first day when security at the airports in the U.S. was a total zoo (unless STL was unique, but I don't think so), added baggage handling (with concomitant baggage loss claims, etc.) from more people checking their bags since--something that, as a f/a, I admit I love. Calling in off-duty agents for overtime to help with the mess in those first few days.

All of these can be "associated" with the LHR security issue from an accounting standpoint, because if it weren't for LHR, these costs would not have been incurred.

Back on original post...

I am concerned that the company has released a statement saying that unit revenue has increased. That is NOT the same thing as saying we made a profit in the quarter.

For instance, you had revenue of $50 million in the quarter last year, but had a net loss of $100 million because your costs were $150 million (simplified example).
This year you had revenue of $100 million for the same quarter, but had a net loss of $100 million because your costs had increased to $200 million.

You can still say that unit revenue increased 100% over same quarter last year--$100 million vs $50 million. The fact that you still lost a pot full of money goes unmentioned.

 

[FWAAA]

I am concerned that the company has released a statement saying that unit revenue has increased. That is NOT the same thing as saying we made a profit in the quarter.

I think you're reading too much into this release - AA has released similar unit revenue guidance like this for years in advance of the end of the quarter.

The real news here is how much smaller this percentage increase is for the third quarter than for the past 7 or 8 quarters when unit revenue has increased more like 10% to 15% year over year. This 7.5% consolidated unit revenue gain and 7.1% mainline unit revenue improvement is about half of what I expected.

A bunch of it might be related to a peak in the willingness of pax to pay higher and higher ticket prices and some of it might be related to the Innane Security Hassles instituted by the TSA on Aug 10. I know lots of people who are flying less because they don't check bags and they don't like relying on FAs for all their liquids.

Just when airlines were finally recovering, along come the fear mongers to demonize water bottles and shampoo. Idiots.

 

[kirkpatrick]

Just when airlines were finally recovering, along come the fear mongers to demonize water bottles and shampoo. Idiots.

It looks like there is going to be a change in all that foolishness.

MK

 

[upsilon]

I know lots of people who are flying less because they don't check bags and they don't like relying on FAs for all their liquids.

While I have both "liked" and "relied on" the FAs for my "liquids", I too know many, including myself, who are flying less.
I was locked into a Europe trip out of JFK on 8/12. I usually carry on a 22" roller and a computer bag. Outbound I checked roller to avoid any hassle. Returning a week later I had a hassle in CDG about my computer bag as carry on.

AA has lost revenue from several trips I decided not to take as a result of the new "security" measures.