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American Airlines reported record Q2 net profit of $1.9 billion

Staff writer |
American Airlines Group reported its second quarter 2015 results. American Airlines Group's second quarter 2015 net profit, excluding net special charges, was a record $1.9 billion.

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This is $2.62 per diluted share versus a second quarter 2014 net profit excluding net special charges of $1.5 billion, or $1.98 per diluted share. The company's second quarter 2015 pretax margin excluding net special charges was a record 17.2 percent, up 4.4 percentage points from the same period last year.

On a GAAP basis, the company reported a record net profit of $1.7 billion, or $2.41 per diluted share. This compares to a GAAP net profit of $864 million in the second quarter 2014, or $1.17 per diluted share.

Total revenue in the second quarter was $10.8 billion, a decrease of 4.6 percent versus the second quarter 2014 on a 1.9 percent increase in total available seat miles (ASMs). Consolidated passenger revenue per ASM (PRASM) was 13.57 cents, down 6.9 percent versus the second quarter 2014. Consolidated passenger yield was 16.28 cents, down 6.1 percent year-over-year.

Total operating expenses in the second quarter were $8.9 billion, a decrease of 10.5 percent compared to the second quarter 2014, due primarily to a 36.9 percent decrease in consolidated fuel expense. Second quarter mainline cost per available seat mile (CASM) was 11.87 cents, down 12.8 percent on a 1.5 percent increase in mainline ASMs versus the second quarter 2014.

Excluding net special charges and fuel, mainline CASM was 8.77 cents, up 2.5 percent compared to the second quarter 2014. Regional CASM excluding special charges and fuel was 16.02 cents, up 1.4 percent on a 5.5 percent increase in regional ASMs versus the second quarter 2014.

As of June 30, 2015, the company had approximately $9.7 billion in total cash and short-term investments, of which $747 million was restricted. The company also had an undrawn revolving credit facility of $1.8 billion.

American continues to invest in its product. As part of an extensive fleet renewal plan that has made American's fleet the youngest of any U.S. network airline, the company expects to spend $5.4 billion on new aircraft this year. During the second quarter, the company took delivery of 24 new mainline aircraft and nine new regional aircraft and retired 34 older mainline and eight older regional aircraft.

In addition to this fleet renewal program, American is in the midst of investing $2 billion to further enhance its product, including improvements to aircraft interiors, international Wi-Fi connectivity and upgrades to its Admirals Club lounges.

In the second quarter, the company returned $823 million to its shareholders through the payment of $70 million in quarterly dividends and the repurchase of $753 million of common stock, or 17.3 million shares, at an average price of $43.53 per share.

When combined with the dividends and shares repurchased during the first quarter, the company has returned approximately $1.1 billion to its shareholders in the first half of 2015, including $943 million of shares repurchased under the existing $2 billion share repurchase program approved in January 2015.

Due to the company's strong financial performance, its projected cash flow and the repurchase activity to date, the American Airlines Group Board of Directors has authorized an additional $2 billion share repurchase program to be completed by December 31, 2016.

This brings the total amount of share repurchase programs authorized in 2015 to $4 billion. The company also declared a dividend of $0.10 per share to be paid on August 24, 2015, to shareholders of record as of August 10, 2015.

Approximately $629 million of the company's unrestricted cash and short-term investment balance was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars per U.S. dollar and approximately $8 million valued at 12.8 bolivars per U.S. dollar, with the rate depending on the date the company submitted its repatriation request to the Venezuelan government.

These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government's currency exchange system.


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