AMR Corporation Reports a Second Quarter 2009 Net Loss of $390 Million

FORT WORTH, Texas, July 15 /PRNewswire-FirstCall/ -- AMR Corporation (NYSE: AMR), the parent company of American Airlines, Inc., today reported a net loss of $390 million for the second quarter of 2009, or $1.39 per share. The results include the impact...


Following the Company's sale-leaseback transaction in the second quarter, long-term debt payments, and the completion of the $520 million public offering of enhanced equipment trust certificates, which closed on July 7, AMR estimates it has approximately $3.7 billion in unencumbered assets and other sources of liquidity, which includes assets that could be sold or financed, such as aircraft, the AAdvantage program, route authorities, slots and its American Eagle subsidiary. The Company also expects to disencumber more than $500 million in additional assets as a result of scheduled debt maturities later this year.

Second Quarter and Recent Highlights

Guidance

Mainline and Consolidated Capacity

AMR expects its full-year mainline capacity to decrease by approximately 7.5 percent in 2009 compared to 2008, with a reduction of domestic capacity of approximately 9 percent and a reduction of international capacity of more than 4 percent compared to 2008 levels. On a consolidated basis, AMR expects full-year capacity to decrease by approximately 7.5 percent in 2009 compared to 2008.

As a result, as announced in June 2009, AMR expects second half 2009 mainline domestic capacity to decline by approximately 7.5 percent and international capacity to decline by approximately 5.5 percent compared to the second half of 2008.

AMR expects mainline capacity in the third quarter of 2009 to decrease by approximately 8.5 percent compared to the third quarter of 2008, with domestic capacity expected to decline by approximately 10.5 percent and international capacity expected to decline by approximately 6 percent compared to third quarter 2008 levels. AMR expects consolidated capacity in the third quarter of 2009 to decrease by approximately 9 percent compared to the third quarter of 2008.

AMR expects regional affiliate capacity to decline by approximately 11.5 percent in the third quarter of 2009 compared to the prior-year period and expects full-year regional affiliate capacity to decline by approximately 8.5 percent in 2009 compared to 2008.

Fuel Expense and Hedging

While the cost of jet fuel remains very volatile, based on the July 7 forward curve AMR is planning for an average system price of $2.05 per gallon in the third quarter of 2009 and $1.98 per gallon for all of 2009. AMR has 33 percent of its anticipated third quarter 2009 fuel consumption hedged at an average cap of $2.53 per gallon of jet fuel equivalent ($99 per barrel crude equivalent), with 30 percent subject to an average floor of $1.84 per gallon of jet fuel equivalent ($70 per barrel crude equivalent). AMR has 36 percent of its anticipated full-year consumption hedged at an average cap of $2.52 per gallon of jet fuel equivalent ($97 per barrel crude equivalent), with 33 percent subject to an average floor of $1.88 per gallon of jet fuel equivalent ($70 per barrel crude equivalent). As of July 1, the average 2009 market forward price of crude oil was $71 per barrel. Consolidated consumption for the third quarter is expected to be 696 million gallons of jet fuel.

Mainline and Consolidated Unit Costs (Excluding impact of special items)

For the third quarter of 2009, mainline unit costs are expected to decrease by 14 percent compared to the third quarter of 2008, while third quarter consolidated unit costs are expected to decrease by 13.9 percent compared to the third quarter of 2008.

In the third quarter of 2009, mainline unit costs excluding fuel are expected to increase 7.2 percent year over year while consolidated unit costs excluding fuel are expected to increase 6 percent compared to the third quarter of 2008.

Full-year mainline unit costs are expected to decrease 9.2 percent in 2009 compared to 2008, while full-year consolidated unit costs are expected to decrease 9.4 percent in 2009 compared to 2008.

AMR expects mainline unit costs excluding fuel to be 6.6 percent higher in 2009 versus 2008, while 2009 consolidated unit costs excluding fuel are expected to increase 5.4 percent year over year.

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