American Airlines parent AMR Corp. reported first-quarter net income of US$81 million, reversed from a net loss of US$92 million in the year-ago period, marking its fourth consecutive profitable quarter and its first opening quarter in the black since 2000.

The carrier overcame poor weather that forced it to cancel 3% of mainline flights, leading to an estimated US$60 million reduction in revenue. Chairman and CEO Gerard Arpey said he was pleased that the "momentum" from a profitable 2006 carried into the first three months of 2007 and that AA is "on the right track" toward sustained profitability, but he cautioned during a conference call with analysts yesterday that "we've got a lot of work to do to recover from the US$8 billion we lost from 2001 to 2005."

First-quarter revenue increased 1.6% to US$5.43 billion while expenses decreased 1% to US$5.18 billion, producing a more than doubling of operating income to US$248 million from US$115 million in the year-ago period. Fuel expenses actually lowered 4.3% in the quarter to US$1.41 billion.

Mainline traffic dipped 1.3% to 32.58 billion RPMs on a 2.5% drop in capacity to 41.69 billion ASMs, leading to a load factor of 78.1%, up 0.9 point. "We've been running at record load factors month after month after month," Arpey noted, pointing to a "fairly attractive supply and demand balance" for US carriers. AA projects a year-over-year second-quarter mainline capacity reduction of 3.1% and a 1.8% full-year capacity decrease, with domestic capacity down 2% and international capacity 0.9% lower.

First-quarter yield rose 3.3% to 13.28 cents as RASM lifted 4.5% to 10.38 cents and CASM increased 0.9% to 10.91 cents. CASM excluding fuel was up 2.2% to 7.86 cents.

AMR said its improved earnings over the past year have allowed it to begin lowering its enormous debt burden. Total debt at the end of the first quarter was US$17.5 billion, down 11.2% from US$19.7 billion on March 31, 2006. "Already this year we have paid down a US$285 million line of credit, prepaid US$79 million in aircraft debt and refinanced US$350 million in bonds," Arpey said. "By chipping away at the mountain of debt we accumulated during the early part of this decade, we are reducing risk, cutting interest costs and strengthening our foundation for the future."