American Airlines Parent Beats Out Negative 4Q Predictions

AMR published its earnings reports Wednesday, bringing continuing good news for the air carrier industry. The world's largest airline showed a profit for 2006 for the first time since the terrorist attacks of 9/11.

Additionally, despite predictions to the contrary from Wall Street, the airline eked out a narrow profit of $17 million for the fourth quarter of last year as well. That compares to a $600 million loss for previous year's last quarter.

This is also the third profitable quarter in a row for the airline, another milestone not seen since 2000.

In a prepared statement, the airline's CEO Gerard Arpey said, "By producing a fourth-quarter and full-year profit for the first time since 2000, the people of American Airlines made 2006 a proud milestone in our ongoing turnaround. We have a lot of work left to do, but the track we are on today is the right track to position our company for long-term success."

Helping the airline to stay in the green for the final quarter was a break in fuel costs. That allowed AMR cut overall costs sharply enough to squeeze a profit from revenues of $5.40 billion. Dropping oil prices allowed the company to cut its fuel costs by 8.5 percent.

The airline reported more passengers in 2006 than 2005, pushing earnings to $231 million on total revenues of $22.56 billion. That compares to an $857 million loss for 2005 on revenues of $20.71 billion.

In what some may view as the other side of the coin, American -- and the industry as a whole -- became more profitable partly on the strength of 10 industry-wide rate increases. How those rate increases (especially if the industry continues to dip from the well) might affect the number of passengers in the future remains to be seen.

FMI: www.aa.com