Tags: US | Earns | AMR

AMR Reports $505 Million First-Quarter Loss

Wednesday, 21 Apr 2010 01:30 PM

The parent of American Airlines says it lost $505 million in the first quarter as traffic stabilized but didn't improve much.

AMR Corp. was also hurt by the February snowstorms that closed airports and forced thousands of flights to be canceled along the East Coast, and by earthquakes in Haiti and Chile.

American says the natural disasters cost it between $20 million and $25 million.

Air travel is recovering from the recession, but only slowly. Traffic on American, measured by the number of miles that paying passengers flew, increased less than 1 percent in the quarter. The company is hoping for stronger bookings in the busy summer vacation season, and analysts expect AMR will make money in the second and third quarters.

Carriers are raising fares and picking up revenue from extra fees for checked bags and other services, but they're also facing resurgent fuel prices.

American also faces difficult relations with its labor unions, which are negotiating for pay raises while the company tries to hold the line on spending. Two of American's three unions have asked federal mediators to let them start a 30-day countdown toward a strike; mediators instead ordered negotiators to keep working.

AMR's first-quarter loss worked out to $1.52 per share. AMR said that without a one-time expense for devaluation of Venezuelan currency in January, it would have lost $452 million, or $1.36 per share.

Revenue rose 4.7 percent, to $5.07 billion.

Analysts, who usually exclude one-time costs from their forecasts, were expecting AMR to lose $1.31 per share on $5.1 billion in sales.

In last year's first quarter, the Fort Worth, Texas-based company lost $375 million, or $1.35 per share.

CEO Gerard Arpey said AMR made progress boosting revenue in the first quarter but was "simply unable to overcome the challenges of the global economic environment coupled with once-again escalating fuel prices."

AMR, which also owns the American Eagle regional airline, increased spending on fuel and maintenance by double-digit percentages. Fuel prices have risen about 20 percent since early February, and regulators have proposed fining AMR millions for alleged violations of federal maintenance rules.

American scored a significant win in the quarter by preserving an alliance with Japan Airlines, which was wooed by Delta Air Lines Inc. And U.S. regulators signaled willingness to let American work closely with British Airways on trans-Atlantic flights without violating antitrust laws.

At home, American is adding flights in New York to compete with Delta and other carriers in the largest U.S. travel market.

AMR shares fell 25 cents, or 2.9 percent, to $8.31 in midday trading.

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The parent of American Airlines says it lost $505 million in the first quarter as traffic stabilized but didn't improve much.AMR Corp. was also hurt by the February snowstorms that closed airports and forced thousands of flights to be canceled along the East Coast, and by...
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2010-30-21
Wednesday, 21 Apr 2010 01:30 PM
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