AMR expects mainline capacity in the first quarter of 2010 to decrease by 2.8 percent compared to the first quarter of 2009, with domestic capacity expected to be down 1.7 percent and international capacity expected to be down 4.5 percent compared to first quarter 2009 levels. AMR expects consolidated capacity in the first quarter of 2010 to decrease by 2.6 percent compared to the first quarter of 2009.
Fuel Expense and Hedging
While the cost of jet fuel has been increasing recently and remains volatile, based on the Jan. 8 forward curve, AMR is planning for an average system price of $2.36 per gallon in the first quarter of 2010 and $2.42 per gallon for all of 2010.
AMR has 30 percent of its anticipated first quarter 2010 fuel consumption hedged at an average cap of $2.55 per gallon of jet fuel equivalent ($97 per barrel crude equivalent), with 27 percent subject to an average floor of $1.84 per gallon of jet fuel equivalent ($67 per barrel crude equivalent). AMR has 24 percent of its anticipated full-year consumption hedged at an average cap of $2.48 per gallon of jet fuel equivalent ($93 per barrel crude equivalent), with 22 percent subject to an average floor of $1.80 per gallon of jet fuel equivalent ($65 per barrel crude equivalent).
As of Jan. 8, the average 2010 market forward price of crude oil was more than $85 per barrel. Consolidated consumption for the first quarter is expected to be 662 million gallons of jet fuel.
Mainline and Consolidated Cost per Available Seat Mile (CASM) - Excluding Impact of Special Items
All of the expected 1.1 percent increase in consolidated cost per seat mile, excluding fuel, for 2010 is due to anticipated higher revenue-related expenses (such as booking fees and commissions) and financing costs related to Boeing 737-800 and other aircraft to be delivered in 2009 and 2010. However, 737-800 aircraft are 35 percent more fuel efficient on a seat-mile basis than the MD-80s they are replacing and mainline fuel efficiency for 2010 is expected to be better by over 2 percent versus last year.
Editor's Note: AMR's Chairman and Chief Executive Officer, Gerard Arpey, and its Executive Vice President and Chief Financial Officer, Thomas Horton, will make a presentation to analysts during a teleconference on Wednesday, January 20, at 2 p.m. EST. Following the analyst call, they will hold a question-and-answer conference call for media. Reporters interested in listening to the presentation or participating in the media Q&A should call 817-967-1577.
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