Wednesday, AMR Corp. (AMR), the parent company of American Airlines, Inc., reported a swing to third-quarter net loss, hurt by a 20% decline in revenue and the absence of a $432 million gain from the sale of American Beacon Advisors included in the prior year quarter.
The Fort Worth, Texas-based company reported a third-quarter net loss of $359 million or $1.26 per share, compared to a net profit of $31 million or $0.12 per share a year ago.
On a non-GAAP basis, third-quarter net loss narrowed to $265 million or $0.93 per share from a net loss of $374 million or $1.45 per share in the third quarter of 2008.
On average, ten analysts polled by Thomson Reuters estimated a loss of $0.95 per share for the quarter. Analysts' estimates typically exclude special items.
Reported results for the third quarter include the impact of $94 million in non-recurring charges related to the sale of certain aircraft and the grounding of leased Airbus A300 aircraft prior to lease expiration.
Previous year's results include a $432 million gain from the sale of American Beacon Advisors and $27 million in one-time severance and aircraft charges related to capacity reductions.
For the preceding second quarter, AMR had reported a narrower loss, on a lower one-time charge from the year-ago period. Net loss for the second quarter was $390 million or $1.39 per share, compared to a net loss of $1.46 billion or $5.83 per share in the year ago quarter.
Third-quarter revenue declined more than 20% to $5.1 billion from $6.4 billion, mainly due to reduced capacity and the reduced demand for air travel and cargo resulting from the global economic downturn. Analysts expected revenue of $5.09 billion for the quarter.
Segment wise, passenger revenue American Airlines dropped by 21.5% to $3.88 billion from $4.95 billion. Passenger revenue from regional affiliates decreased 21.7% to $523 million from $668 million. Cargo revenue fell 40.8% to $136 million from $230 million, whereas other revenues increased 1.4% to $585 million from $577 million.
In the prior second quarter, AMR reported total operating revenues of $4.89 billion, a 20.9% decline from the $6.18 billion reported in the second quarter of 2008.
Operating income for the third quarter under review declined 10% to $194 million from $216 million.
The company's mainline passenger revenue per available seat mile declined 14.5% to 10.07 cents from 11.79 cents in the year-ago quarter. Mainline cost per available seat mile fell 13.5% year over year, due to lower fuel prices. Passenger load factor rose 1.8 percentage points to 83.9% from 82.2% in the third quarter of 2008.
Jet fuel expenses for the third quarter decreased 42% to $2.07 per gallon from $3.57 a gallon in the third quarter of 2008 due to fuel hedging. As a result, the company paid nearly $1.1 billion less for fuel in the third quarter of 2009.
Gerard Arpey, chief executive officer of AMR said, "A difficult revenue environment driven by the weakened global economy continues to overwhelm the benefit of significantly lower fuel prices, but our third quarter accomplishments better position us to address these near-term challenges and be competitive and successful for the long haul."
Among its peers, Houston, Texas-based Southwest Airlines Co. (LUV) reported a narrower third-quarter net loss of $18 million or $0.14 per share, compared to $230 million or $2.09 per share in the previous-year quarter. Southwest's third-quarter revenue dropped 20.2% to $3.32 billion from $4.16 billion in the prior-year quarter.
Continental Airlines, Inc. (CAL) also reported a narrower net loss of $16 million or $0.02 per share for the third quarter, compared to a loss of $120 million or $0.16 per share in the prior-year quarter. Continental's third-quarter revenue decreased 7.8% to $2.67 billion from $2.89 billion in the same quarter last year.
Yet another competitor UAL Corp. (UAUA) also reported a narrower loss of $57 million or $0.39 per share, compared to a net loss of $792 million or $6.22 per share a year ago. UAL's third-quarter revenue decreased 20.3% to $4.43 billion from $5.57 billion in the comparable quarter last year.
Other airliners including Delta Air Lines, Inc. (DAL) and JetBlue Airways Corp. (JBLU) are scheduled to report their third quarter results on Thursday. For Delta, analysts expect a loss of $0.05 per share on revenues of $7.61 billion. Analyst estimates for JetBlue are for earnings of $0.05 per share on revenues of 846.75 million.
Looking forward, AMR expects mainline capacity in the fourth quarter to decrease 6% compared to the fourth quarter of 2008, with domestic capacity expected to decline 5% and international capacity expected to decline 7.5% compared to fourth quarter 2008 levels. AMR expects consolidated capacity in the fourth quarter to decrease 5.5% compared to year-earlier quarter.
For the full year, AMR expects mainline capacity to decrease 7.5% compared to 2008, with a reduction of domestic capacity of 9% and a reduction of international capacity of 5% compared to 2008 levels. On a consolidated basis, AMR expects full-year capacity to decrease by 7.5% compared to 2008.
The company said it is planning for an average system price of $2.12 per gallon in the fourth quarter and $2.00 per gallon for 2009. AMR has 31% of its anticipated fourth quarter fuel consumption hedged at an average cap of $2.41 per gallon of jet fuel equivalent, or $96 per barrel crude equivalent, with 28% subject to an average floor of $1.73 per gallon of jet fuel equivalent, or $67 per barrel crude equivalent.
Further, the company said it plans to focus its presence in Dallas/Fort Worth, Chicago, Miami, New York and Los Angeles while keeping 2010 capacity relatively flat by eliminating unprofitable flying in non-core markets.
Compared to the Winter 2009/2010 schedule, the company plans to add 57 daily flights in Chicago, 23 in Miami, 19 in Dallas/Fort Worth, and 11 in New York and Los Angeles combined for Summer 2010.
AMR also has plans for American Eagle to enhance its product by adding a first class cabin to its fleet of 25 Bombardier CRJ700 regional jets and by signing a letter of intent with Bombardier, Inc. to exercise options for the purchase of 22 additional CRJ700 aircraft for delivery beginning in the middle of 2010. The new CRJ700 aircraft are expected to be fully financed, the company said.
Analysts at UBS upgraded AMR to 'Buy' from 'Neutral' on September 25th.
AMR is losing $0.82 or 10.57% and is trading at $6.85 on a volume of 32.38 million shares on the New York Stock Exchange.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.