S&P raises outlook on AMR to 'stable'
S&P raises outlook on American Airlines parent AMR to 'stable' on improving financial results

November 1, 2010, 6:21 pm EDT
NEW YORK (AP) -- Standard & Poor's on Monday raised its outlook on American Airlines parent AMR Corp. to "stable" on the company's improving financial results, including its latest reported profit.

S&P raised the outlook on both parent AMR and American Airlines to "stable" from "negative" and affirmed the "B-minus" corporate credit rating, which is below investment-grade. The agency said it might raise ratings if AMR keeps making money and refinances debt due in the next two years.

S&P lowered ratings on some aircraft financings called enhanced equipment trust certificates, citing questions about collateral protection.

Last month, the company reported its first profit since the third quarter of 2008, when it benefited from an asset sale, and its first quarterly operating profit since the third quarter of 2007. It earned $143 million, which surpassed Wall Street expectations, as revenue rose 14 percent, mostly on higher fares.

American is trying to boost international revenue through expanded partnerships with British Airways and Japan Airlines. At home, it's seeking to bolster service around hubs in five big metro areas -- New York, Los Angeles, Chicago, Dallas and Miami.

However, AMR continues to lag behind other large U.S. airlines in profitability and is expected to post a loss for the full year of 2010, and it's also heavily in debt -- factors that S&P pointed out. S&P said AMR's credit measures remain weaker than those of rivals.

AMR shares fell 16 cents, or 2 percent, to $7.73.