American Airlines parent loses $375 million in first quarter, blames economy

April 16, 2009


Apr. 16--AMR Corp., parent of American Airlines Inc., said on Wednesday that it lost $375 million in the first quarter as the recession dampened demand and reduced the company's revenue by 15 percent.

"While lower fuel prices have provided a significant buffer against falling demand in 2009, the struggling economy and capital markets remain significant challenges for American and the rest of the industry," AMR chairman and chief executive officer Gerard Arpey said.

"Even as we feel the impact of declining revenues, fares and traffic, we continue to make progress in areas within our control," he said.

AMR said it lost $1.35 per share on revenue of $4.84 billion, compared to a net loss of $341 million, or $1.37 a share, on revenue of $5.70 billion in first quarter 2008.

The results beat analysts' consensus, which had grown progressively gloomier in recent weeks and had dropped to a loss of $1.68 a share by Wednesday.

Last year, the company was struggling with rapidly rising energy prices, with its fuel bills hitting $2.05 billion in the first quarter. After peaking in mid-2008, jet fuel prices have been on a slide since then. AMR's first-quarter bill was $1.30 billion, down $752 million and 37 percent from the 2008 period.

Part of the decline in 2009's revenue is the result of AMR's decision to cut flying capacity at American and American Eagle Airlines Inc. by 8 percent in the first quarter. But it also is a function of the average passenger paying less to fly, with fares per mile down 4.5 percent from first quarter 2008.

American said last quarter marked the first drop in year-over-year yields -- passenger revenues per mile flown -- in 16 quarters.

"The decrease in yield was largely due to more aggressive pricing industrywide and reduced traffic in the premium cabins," the carrier said.

The loss was AMR's biggest for a first quarter since the Fort Worth-based company posted a $1.04 billion loss in 2003. AMR has now lost money in eight of the last nine first quarters, traditionally one of the airline industry's softest periods for travel.

AMR was the first major U.S. carrier to report first quarter results. Dallas-based Southwest Airlines Co. will release its results Thursday, with other major carriers set to announce their results next week.