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Does American Airlines Really Need a Merger After July Profit of $292 Million?

Aug 26, 2013 2:25 pm

Skift Take

American Airlines could probably make it as a standalone carrier post-bankruptcy, but its international network would definitely need some strong, new partnerships.

— Dennis Schaal

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AMR Corp., the parent company of American Airlines, reported a $292-million profit for the month of July, a new monthly record for the company that is trying to exit bankruptcy in the next few months.

Excluding $57 million in reorganization fees, the Fort Worth-based carrier reported $349 million in operating profits, according to a monthly filing required by the bankruptcy court.

In comparison, AMR reported a $357-million profit for the entire second quarter of 2013, the company said.

In a letter to employees, AMR Chief Executive Tom Horton called the financial report a sign that “we are completing one of the most successful turnarounds in aviation history.”

“We are building a strong, competitive and profitable new American poised to lead again,” he wrote.

The strong profit, however, cut against AMR’s justification to merge with US Airways. The carrier has said it needs the merger to better compete against its larger rivals, such as Delta and United.

The proposed merger has been challenged by the U.S. Justice Department, which has filed a lawsuit arguing that such a merger would cut competition and lead to higher fares for passengers.

The airlines last week filed motions requesting a Nov. 12 trial date, about three months sooner than the Justice Department’s proposed trial date. ___

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