Jan. 21--AMR Corp., the parent of American Airlines, reported a fourth-quarter loss of $344 million or $1.03 per share Wednesday as the economic downturn took a toll on air travel demand.
In 2008's fourth quarter, Fort Worth-based AMR posted a loss of $347 million or $1.24 per share.
Despite vigorous cost-cutting efforts and a 19.3 percent reduction in fuel expenses that decreased total expenses 3.7 percent in the quarter, AMR couldn't overcome the travel slump, reduced seating capacity and low air fares, company executives said. Fuel costs, while down last year from 2008, represent 27 percent of total operating expenses compared with 15 percent in 2003, officials said.
"The industry hasn't moved prices to where it covers the increase in fuel (costs)," Chairman and CEO Gerard Arpey said in a conference call with industry analysts and media. "We have to get our prices to where they cover our costs."
AMR's revenue in the fourth quarter was $5.06 billion, a 7.4 percent decrease from $5.47 billion in 2008's fourth quarter.
For the year, AMR had a net loss of $1.47 billion or $4.99 per share, a 30.7 percent improvement from 2008's net loss of $2.12 billion or $8.16 per share.
AMR's revenue in 2009 was $19.9 billion, down 16.2 percent from $23.76 billion in 2008. "Other revenues," however, which include checked bag fees, confirmed flight changes and on-board food purchases, increased 5.4 percent, to $2.29 billion.
"Service charges have become an important component for airlines," Arpey said. "I would expect that trend to continue."
In the fourth quarter, American Airlines flew 29.9 billion revenue passenger miles, a 1.6 percent decline from 2008's fourth quarter, on a capacity decrease of 4.9 percent. A revenue passenger mile is flying one paying passenger one mile.
American's revenue yield or average fare per passenger mile was 12.7 cents, a 7.6 percent decrease from 13.7 cents in 2008's fourth quarter.
American consumed 609 million gallons of fuel in the fourth quarter, down 4.4 percent from a year earlier, as fuel prices declined 16.5 percent to an average of $2.17 a gallon.
Arpey said the airline battled through economic turmoil in the last year but laid the foundation for a successful future.
During the year, AMR raised more than $5 billion in financing to improve liquidity, finance deliveries of 31 new fuel-efficient Boeing 737-800s and refinance existing debt maturities, Arpey said.
"The fuel crisis of 2008 was replaced by the worst recession in decades, which hurt travel demand severely, and tight capital markets," he said. "Yet, we took steps to address those challenges by bolstering our liquidity and financial flexibility and remaining disciplined with capacity.
"At the same time, we strengthened our global network, reinvested in our fleet and products and made strides to improve our dependability and our customers' experience."
For the year, American flew 122.4 billion revenue passenger miles, a 7.1 percent decrease from 2008, on a capacity reduction of 7.2 percent.
Passenger yield or average fare was 12.28 cents per mile, down 11.2 percent from a year earlier, as operating expenses per available seat mile slipped to 12.22 cents, an 11.9 percent decline from 2008.
AMR's 2009 results included an 18.5 percent decrease in expenses, to $20.9 billion, and a 38.4 percent decrease in fuel expenses at $5.55 billion. The company paid an average price of $2.01 per gallon for fuel last year, down 33.7 percent from $3.03 per gallon in 2008.
Chief Financial Officer Thomas Horton said the company will take delivery of 45 new 737-800s in 2010 and eight 737-800s in 2011.
Horton said he anticipates American's seating capacity to decrease 2.6 percent in the first quarter compared with 2009's first quarter. For the year, American's capacity will increase 0.9 percent compared with 2009, with domestic capacity down 0.5 percent and international capacity rising 3.2 percent compared with 2009.