Thursday, July 24, 2014 2:08:09 PM
When the new American Airlines Group launched itself Dec. 9 with more than $10 billion in cash, investors wanted to know what it was going to do with so much money on hand.
On Thursday, the company provided an answer.
It announced that it would begin paying a quarterly dividend of 10 cents a share as well as:
– Prepay more than $2.8 billion in debt and aircraft leases.
– Devote $1 billion to repurchase its shares by the end of 2015.
– Contribute an extra $600 million to its pension plans, in addition to the $120 million minimum contribution it was required to make.
The company said it ended the second quarter June 30 with about $10.3 billion in cash and short-term investments, even though it had repaid about $502 million in debt during the three months.
The announcement was part of its report of second quarter earnings of $1.5 billion excluding items and special charges. Including those items, it earned $864 million.
American Airlines chairman and CEO Doug Parker said the dividend was the first paid by American since 1980, before it transformed itself into AMR Corp. in 1982, filed for bankruptcy in 2011 or merged Dec. 9, 2013, with US Airways.
“We are very pleased to report the highest quarterly profit in the history of American Airlines. Our merger is off to a great start and our 100,000 team members are doing a wonderful job working together to take care of our customers,” Parker said.
“We are also pleased to announce a capital deployment program that reduces our debt, provides additional pension contributions and returns capital to shareholders,” he said.
“The fact that we are able to implement this program while still funding our significant product improvements, fleet renewal program and integration costs is further evidence of the success of our merger. We have much hard work ahead, but we are extremely encouraged by the great work being done by our team members,” Parker said.
Excluding the items and charges, American earned $1.46 billion, compared to $681 million earned by predecessors AMR and US Airways Group combined in second quarter 2013.
On that basis, American earned $1.98 a share, compared to analysts’ consensus of $1.95.
The company had advised investors two weeks ago that it would take around $600 million in charges. The actual amount was $592 million.
That included $253 million in special operating charges, including $163 million in expenses relating to merger integration; $38 million to settle bankruptcy-related obligations; $37 million to buy out aircraft leases; and $15 million in other charges.
It also included $337 million in a non-cash tax charge, mostly of which was a $330 million non-cash tax charge connected to its sale of fuel hedging contracts.
American said it would pay the dividend Aug. 18 to shareholders of record Aug. 4.
It outlined these actions and plans for debt and lease payments:
Since the merger closed in December 2013, the Company has prepaid $420 million of aircraft debt and bond obligations.
In addition, the Company plans to prepay $480 million of special facility revenue bond obligations by the end of 2014. It is anticipated that these prepayments will represent a reduction in the Company’s debt going forward.
The Company has also used $630 million of cash to purchase aircraft that were previously leased to the Company and anticipates utilizing an additional $370 million of cash in this manner through the remainder of 2014.
In addition, the Company has called for redemption of the remaining $900 million principal amount of the 7.5% senior notes due March 15, 2016.
In total, these steps represent approximately $2.8 billion of prepayments that will be completed by the end of 2014.
The company also updated investors on the situation in Venezuela, where foreign airlines have been unable to get their revenues out of that country. American said it held $791 million in Venezuelan bolivars as of June 30 that it waiting to repatriate. That compares to $750 million on March 31.
American, the largest U.S. operator of flights to Venezuela, greatly reduced its U.S.-Venezuela schedule July 1 because of the inability to get its money out of the country. Other U.S. carriers have also slashed their schedules for the same reason.
American said its operating revenues totaled $11.36 billion in the second quarter, compared to $10.30 billion for American and US Airways combined a year earlier.
Recent AAL News
- U.S. Futures Drop in Pre-Market Trading as Tech Stocks Plunge After Meta Issues Gloomy Forecast • IH Market News • 04/25/2024 11:53:54 AM
- American Airlines Reports First-Quarter 2024 Financial Results • GlobeNewswire Inc. • 04/25/2024 11:00:00 AM
- SriLankan Airlines Leverages UATP Merchant Status to Accelerate Growth and Reduce Payment Costs • PR Newswire (US) • 04/10/2024 12:00:00 PM
- American Red Cross welcomes American Airlines as its newest Mission Leader • PR Newswire (US) • 04/04/2024 12:03:00 PM
- FedEx Soars 13% with Profits Above Forecasts, Nike Hit by China Slowdown, and Latest News • IH Market News • 03/22/2024 01:07:53 PM
- American Airlines to present at 2024 J.P. Morgan Industrials Conference • GlobeNewswire Inc. • 03/05/2024 03:00:00 PM
- AMD Hits Regulatory Roadblock, GitLab’s Stock Tumbles on Disappointing Earnings, and Latest News • IH Market News • 03/05/2024 11:05:08 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/29/2024 10:23:51 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/26/2024 09:06:58 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/26/2024 09:06:09 PM
- Goldman Sachs Reconsiders Fed Cuts, LUNR Surges Over 40% in Pre-Market, and More • IH Market News • 02/23/2024 01:03:59 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/22/2024 10:06:38 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/22/2024 10:05:59 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/22/2024 10:04:49 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/22/2024 10:04:06 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/22/2024 10:02:14 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/22/2024 10:01:21 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/21/2024 09:23:06 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/21/2024 09:21:40 PM
- UATP Receives Patent Approval for Innovative New Payment Technology • PR Newswire (US) • 02/15/2024 02:19:00 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/13/2024 09:58:48 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/12/2024 09:45:40 PM
- American Airlines Group to webcast Investor Day presentation • GlobeNewswire Inc. • 02/01/2024 05:00:00 PM
- American Airlines reports fourth-quarter and full-year 2023 financial results • GlobeNewswire Inc. • 01/25/2024 12:00:00 PM
- Wall Street Highlights: Nokia’s Margins Surprise, FAA Halts Boeing Production Expansion, and More • IH Market News • 01/25/2024 11:25:22 AM
Bantec Reports an Over 50 Percent Increase in Sales and Profits in Q1 2024 from Q1 2023 • BANT • Apr 25, 2024 10:00 AM
Cannabix's Breath Logix Alcohol Device Delivers Positive Impact to Private Monitoring Agency in Montana, USA • BLO • Apr 25, 2024 8:52 AM
Kona Gold Beverages, Inc. Announces Name Change to NuVibe, Inc. and Initiation of Ticker Symbol Application Process • KGKG • Apr 25, 2024 8:30 AM
Axis Technologies Group and Carbonis Forge Ahead with New Digital Carbon Credit Technology • AXTG • Apr 24, 2024 3:00 AM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM