AMR Corp., parent of American Airlines, said Thursday that its fourth-quarter revenue will exceed last year's, but costs are also likely to be higher than expected.
The mixed news, reported in a filing with the Securities and Exchange Commission, spurred one airline analyst to raise his forecast of AMR's fourth-quarter loss because of higher costs, while another decreased his loss prediction because of the revenue gains.
Executives with AMR, based in Fort Worth, reported that per-seat revenue for the quarter should be up between 13 percent and 14 percent compared with the fourth quarter of 2004.
They also said the airline will have $3.5 billion in unrestricted cash on hand at the end of the year.
But costs will be higher than expected, they added, even when excluding the price of jet fuel.
The higher costs come from insurance expenses, write-offs related to ground equipment and accounting for future management bonuses tied to the airline's rising stock price.
The bonuses cover midlevel and higher managers under a 1998 long-term incentive plan.
That program's benefits depend on the price of AMR's stock. Shares have soared nearly 90 percent during the quarter.
That means the company must increase its estimate of what it will pay out under the plan, spokeswoman Lisa Bailey said.
Jamie Baker, an airline analyst for J.P. Morgan Securities, said in an investment report Thursday that the filing "suggests a slightly softer-than-anticipated result" for the quarter.
He revised his forecast to a $2.45 loss per share of common stock, up from $1.99 per share.
But analyst Ray Neidl of Calyon Securities improved his outlook on the report.
Citing the revenue improvements, he estimated Thursday that AMR will lose $2.56 per share, compared with his previous forecast of $2.82 per share.
The two analysts also diverged on where the airline's stock is heading.
"We believe that the stock price is fully valued, especially going into the slow winter season," Neidl wrote in a report to investors. "We may see a temporary downward adjustment."
Baker, however, said that "AMR is cheap," adding that in his opinion the airline industry has finally turned the corner to recovery and AMR is a good deal for investors.
AMR shares (ticker: AMR) rose Thursday, closing at $22.20 per share, up 75 cents, or 3.5 percent.
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