AMR Corporation Reports Fourth Quarter 2008 Loss of $340 Million

EXCLUDING SPECIAL CHARGES, FOURTH QUARTER LOSS WAS $214 MILLION COMPANY REPORTS $2.1 BILLION LOSS FOR 2008; LOSS WAS $1.2 BILLION EXCLUDING SPECIAL ITEMS, WITH HIGHER FUEL PRICES DRIVING $2.7 BILLION OF ADDITIONAL FUEL EXPENSE...


EXCLUDING SPECIAL CHARGES, FOURTH QUARTER LOSS WAS $214 MILLION

COMPANY REPORTS $2.1 BILLION LOSS FOR 2008; LOSS WAS $1.2 BILLION EXCLUDING SPECIAL ITEMS, WITH HIGHER FUEL PRICES DRIVING $2.7 BILLION OF ADDITIONAL FUEL EXPENSE COMPARED TO 2007

Facing Economic Uncertainty and Fuel Price Volatility in 2009, Company Plans to Further Trim Capacity, Enhance Global Network, Execute on Fleet Replacement, and Focus on Balance Sheet and Dependability

FORT WORTH, Texas , Jan. 21 /PRNewswire-FirstCall/ -- AMR Corporation (NYSE: AMR), the parent company of American Airlines, Inc., today reported a net loss of $340 million for the fourth quarter of 2008, or $1.22 per share.

The results for the fourth quarter of 2008 include the impact of two special charges: a $23 million charge for aircraft groundings, facility write-offs and severance related to the Company's previously announced capacity reductions during the last four months of 2008, and a non-cash pension settlement charge of $103 million driven by a large number of early pilot retirements during 2008, which required any unrecognized gains or losses of the related defined benefit pension plan to be recognized on a proportional basis.

Excluding those special charges, the Company lost $214 million, or $0.77 per share, in the fourth quarter of 2008.

The current quarter results compare to a net loss of $69 million for the fourth quarter of 2007, or $0.28 per share, which included: a $138 million gain on the sale of AMR's stake in ARINC; a $39 million gain from the change to the expiration period for AAdvantage(R) miles; and a $63 million charge from the retirement of 24 MD-80 aircraft. Excluding those special items, AMR lost $184 million, or $0.74 per share, in the fourth quarter of 2007.

For all of 2008, AMR recorded a net loss of $2.1 billion, or $7.98 per share. In addition to the special charges from the fourth quarter of 2008 totaling approximately $126 million, the full-year results include: a $432 million gain from the sale of American Beacon Advisors; facility, severance and aircraft grounding charges of approximately $91 million, and non-cash aircraft and route impairment charges of approximately $1.1 billion related to the Company's capacity reductions in late 2008. Excluding those special items, AMR lost $1.2 billion, or $4.57 per share, for all of 2008.

In 2007, AMR reported a net profit of $504 million, or $1.78 per diluted share. In addition to the special items in the fourth quarter of 2007 totaling a net positive impact of $115 million, the 2007 results included a $30 million charge related to prior-period salary and benefit expense accruals. Excluding those special items, AMR earned a profit of $420 million, or $1.50 per diluted share, in 2007.

Historically high and volatile jet fuel prices continued to challenge the Company in the fourth quarter of 2008. AMR paid $2.60 per gallon for jet fuel in the fourth quarter versus $2.41 a gallon in the fourth quarter of 2007, an 8 percent increase. The Company paid a record $3.03 per gallon for jet fuel for all of 2008, compared to $2.13 for all of 2007, an increase of 42 percent. As a result, the Company paid $133 million and $2.7 billion more for fuel in the fourth quarter and for all of 2008, respectively, than it would have paid at prevailing prices from the corresponding prior-year periods.

"Our fourth quarter and full-year 2008 results reflect the difficulties all airlines faced last year, but we believe our steps to reduce capacity, bolster liquidity, and improve revenue helped us better manage the challenges of record fuel prices and a weak economy," said AMR Chairman and CEO Gerard Arpey . "We believe these actions and our fleet renewal efforts have put us on sounder footing as we face continued economic uncertainty, slower travel demand, and fuel price volatility in 2009. We intend to continue managing our business - from capacity and fleet planning to balance sheet repair, fuel hedging and revenue initiatives - conservatively and with discipline. I want to thank employees for their commitment during a difficult 2008. While significant hurdles remain, I am guardedly optimistic we can regain momentum in 2009."

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