DALLAS (AP) — After years of losses, American Airlines is making money by boosting revenue and cutting labor costs.
The nation's third-largest airline is doing well enough to add dozens of new planes to its fleet, announce new flights to China, and set aside money for profit-sharing with employees.
The results, plus an upgrade from J.P. Morgan, fueled a rally in shares of parent AMR Corp.
AMR said Thursday that it earned $289 million, or 76 cents per share, in the third quarter. That's a turnaround from a loss of $238 million, or 71 cents per share, a year earlier. AMR's adjusted profit was a record $530 million. That figure doesn't include bankruptcy-reorganization costs and other special items.
Revenue rose 6 percent, as passengers paid more per mile to fly. Labor costs fell 13 percent from a year ago, as the company cut jobs during its makeover under bankruptcy protection.
American expects to add about 60 new planes this year to its fleet of more than 600 aircraft. It just announced plans to start flying from Dallas to Hong Kong and Shanghai next year, and it is expanding ties with partner airlines in Latin America. All of those things are either helping to improve the company's financial performance now, or will in the future, Chairman and CEO Tom Horton said in an interview.
"But the most important thing is day-to-day execution," Horton said. American has long struggled with high rates of delays and cancelations, but so far in October there have been eight days with no canceled flights, he said.
Airline officials feel confident enough that they plan to boost passenger-carrying capacity by 3.5 percent in the fourth quarter, compared with the same period last year.
Horton said the airline's improved performance creates momentum for its planned merger with US Airways.
The airlines had expected to close the merger this summer but were delayed when the U.S. Justice Department and several states filed an antitrust lawsuit to block the deal. A trial on the lawsuit is scheduled to start Nov. 25, and Horton said, "We remain open to a reasonable, common-sense settlement" that would allow the airlines to combine.