June 04, 2012
A near breakeven operating performance in April enabled AMR Corp. to maintain its cash balance at about $5.6 billion as it enters a pivotal period of its Chapter 11 reorganization.
The Fort Worth-based operator, which has been building its cash balance since entering Chapter 11 in late November 2011, is about to enter a final round of contract talks with four key union groups after the company’s bankruptcy court completed a series of hearings into the possible rejection of its collective bargaining agreements.
These contract talks will be conducted in the few weeks during which the court deliberates, and while the judge is expected to support AMR’s argument for rejection, the company may offer revised terms to its flight attendants, pilots and two main Transport Workers Union groups to broker consensual accords. As part of the negotiations, AMR, while still requiring the same annual savings demanded in previous negotiations, may offer sweetened incentives to reach that goal.
AMR’s April performance was helped, in part, by a reduced exposure to restructuring costs, which at $75 million were markedly less than the $856 million posted in March. This disparity is reflected in the lack of significant movement in those areas of the restructuring that generate the large one-time costs, and in April there was no substantive movement in the operator’s fleet organization.
Revenue and operating costs for the month stood at a little more than $2 billion, which resulted in a $15 million net loss for the month. Non-operating expenses added a further $52 million to that loss, while the reorganization costs pushed the net loss to $142 million.
The airline’s cash balance, however, totaled close to the $5.6 billion reported at the end of March.