AMR Corp. (AMR), the parent company of American Airlines and American Eagle Airlines, Wednesday reported a wider net loss for the fourth quarter, hurt by higher fuel expenses. Further, the company now expects more-than-expected capacity decline in fiscal 2009. Following the news, the company's shares lost more than 24 in the trading hours.
The company posted a net loss of $340 million or $1.22 per share for the fourth quarter, wider than a net loss of $69 million or $0.28 per share in the prior year quarter. The result for the latest quarter included a charge of $23 million for aircraft groundings, facility write-offs and severance, and a non-cash pension settlement charge of $103 million.
Excluding these charges, net loss widened to $241 million or $0.77 per share from $184 million or $0.74 per share in the year-ago quarter. On average, 11 analysts polled by First Call/Thomson Financial expected the company to report a loss of $0.77 per share for the fourth quarter.
Consolidated revenues for the fourth quarter declined 3.8% to $5.5 billion from $5.7 billion reported in the same quarter of last year. Excluding special items, revenues were $5.6 billion in the previous year quarter. Eight analysts had a consensus revenue estimate of $5.52 billion for the fourth quarter.
AMR's peer, UAL Corp. (UAUA) reported a fourth quarter GAAP net loss of $1.30 billion or $9.91 per share, wider than a loss of $0.05 billion or $0.47 per share in the same period last year. Operating revenues for the quarter fell 9.6% to $4.54 billion from $5.03 billion in the previous year quarter.
AMR reported that its total passenger revenues at American Airlines dropped 4.1% to $4.2 billion, while revenue at the regional affiliates was $554 million, down 8.5% from the corresponding period last year. Fourth quarter cargo revenues declined 13.9% year-over-year to $196 million.
The company said, "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, up 8% from $2.41 per gallon in the fourth quarter of 2007. As a result, the company paid $133 million more for fuel in the fourth quarter than it would have paid at prevailing prices from the corresponding prior-year periods.
Fourth quarter mainline traffic declined 10.4%, while mainline capacity decreased 8.3% over last year. Consequently, passenger load factor dropped 1.9 points in the latest quarter. American's fourth-quarter yield, which represents average fares paid, excluding special items, increased 8.1%.
AMR Chairman and CEO, Gerard Arpey, said, "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."
As a result of Boeing delivery delays, AMR now expects to receive 29 Boeing 737-800 aircrafts in 2009, 39 in 2010 and 8 in the first quarter of 2011. The first deliveries are expected near the end of the first quarter of 2009. The company noted that these 76 Boeing 737s would replace MD-80 aircraft in American's fleet.
For the full year 2008, AMR reported a net loss of $2.1 billion or $7.98 per share, compared to net profit of $504 million or $1.78 per share in the previous year. Excluding items, net loss was $1.2 billion or $4.57 per share, compared to net earnings of $420 million or $1.50 per share in the prior year.
Annual revenues increased 3.6% to $23.8 billion from $22.9 billion in the preceding year.
Street expected the company to report a loss of $4.48 per share on revenue of $23.81 billion for the year.
For the first quarter of 2009, AMR anticipates consolidated capacity to decrease by more than 8.5% over last year. Consolidated unit costs are expected to decrease 3.2% from the first quarter of 2008.
For the full year 2009, the company expects consolidated capacity to decrease by nearly 7%, while consolidated unit costs are expected to decrease 7.1% over 2008. Earlier, the company anticipated consolidated capacity for fiscal 2009 to be more than 6% lower than the 2008 levels.
While the cost of jet fuel remains volatile, AMR said it is planning for an average system price of $2.04 per gallon in the first quarter of 2009 and $2.06 per gallon for all of 2009.
Another peer, UAL said it expects capacity in the range of -12.5% to -11.5% for the first quarter of 2009, and -8.0% to -7.0% for the full year 2009. In addition, the company said it would further reduce the number of salaried and management employees by approximately 1,000 positions by the end of 2009.
AMR is currently trading at $7.92, down $2.54 or 24.28% on a volume of 19.38 million shares. The stock has been moving in a range of $4.00 - $16.49 for the past 52 weeks, with an average daily volume of about 11.17 million shares for the past three months.
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