American Made — No Lost — No Made — No Definitely Lost Money in November

Terry Maxon covers the spin over American’s November financial results.

The bottom-line number for the airline in November was a loss of $347 million. Yikes.

But wait, $301 million of that represented bankruptcy-related items, so we shouldn’t pay attention to those.

Except… then they still lost $46 million. For the month.

And yet they “reported an operating profit of $1 million.” See, they’re making money. Even though they lost nearly $350 million.

“Operating” results can be useful numbers, the idea that there are certain one-time items that obscure the performance and viability of an underlying business. If you’re looking at financial results to gain an understanding of how a venture ‘normally’ operates you may want to exclude certain things from the analysis.

But those same operating results can hinder understanding as well, and I admit that when I see a “$1 million profit” after excluding this and that I am skeptical, inferring that the folks putting together the numbers really really wanted to say that they made money and had to make the amount really really small because it was such a stretch.

American has made real strides in its bankruptcy. They’ve lowered costs, which they needed to do. They’ve invested in their product and have plans to do more along those lines. But they do still have a revenue problem.

Not as big a revenue problem as November’s numbers indicate, since they believe that they lost about $55 million due to hurricane Sandy and the pilot job action that caused passengers to book away and otherwise limit revenue.

It’s only one month’s results but it looks like American has made progress but still has quite a bit of progress to make. Many will think it means they have to merge, I believe that the merger is a distraction from the work that they have to do.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I love this blog as I have said in the past. Definitely appreciative of the travel tips and tricks. But, I just don’t get posts like this….what exactly is the point? I think wsj.com and other financial websites run circles around these types of posts. Don’t be so desperate for content.

  2. @Mark last month i wrote that a deal has become more likely. Although I’ve argued and continue to argue that it is a bad idea both operationally and for US Airways shareholders (Parker will overpay). Far from being desperate for content, I simply write what I am interested in. And the post of this post is “often ‘operating profit’ is b.s. and this is a perfect example, there’s no credibility in claiming a $1mm operating profit on $350mm in losses

  3. The merger is not the problem, the current management is.
    They should have gome to BK yrs ago, terminated pilots plan and frozen the rest.
    Increase the network and do not be fixated on cornerstones, esp LHR with BA by funneling all EU traffic to UK.

    Ultimately, if they had gone kaput and sold to US and then that entity survives, it is better for all than the prolonged agony

    The only good thing about the current system is AAdvantage.

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