Last year was the first profitable year since 2000 for AMR Corp, the parent company of American Airlines, the largest air carrier in the United States, as it posted a full-year profit of US$231 million after five years of losses.

"We executed on every facet of our turnaround plan, from bolstering our financial and competitive positions to investing in our product and strengthening our employee pension plans," said AMR chairman and CEO Gerard Arpey.

Industry sources are cited in an Agence France-Presse report which said AA's profit signals an end to the slump in aviation since the 9/11 terror attacks sparked a widespread decline in the industry with six US carriers facing bankruptcy.

Last year, AMR reduced debt, which included the principal amount of airport facility tax-exempt bonds and the present value of aircraft operating lease obligations, to $18.4 billion at the end of the fourth quarter of 2006, compared to $20.1 billion a year earlier.

In addition to the $1.2 billion in scheduled payments that AMR made in 2006, the company purchased $190 million of its outstanding debt and lease obligations during the year.

AA will also return 19 non-standard 757 aircraft acquired from TWA when their leases expire to save more than $50 million in annual lease costs. Parent AMR has also issued $400 million in common stock intending to use the money from the sale to improve AA's balance sheet.