AMR Reports $924-Million Loss
American Airlines parent AMR Corp., besieged by the travel slump and excessive operating costs, said Wednesday that it lost nearly $1 billion in the third quarter and that the current quarter is also poor. AMR’s stock tumbled 13% in response.
The nation’s largest carrier -- which has announced several cost-cutting steps in recent weeks, including job cuts of 7,000 -- unveiled more measures to further pare expenses. They include deferring delivery of 34 new Boeing Co. jetliners and placing 42 existing planes in storage.
The loss of $924 million, equal to $5.93 a share, was more than double the $414-million loss, or $2.68 a share, in the year-earlier quarter, when American and the other airlines were grounded after the terrorist attacks.
“Any way you look at them, these are terrible financial results,” AMR Chairman Donald Carty said in a statement, adding that “the environment shows little sign of improving.”
American, based in Fort Worth, and the other airlines are enduring one of their worst crises in history. Lingering effects from the attacks -- including reduced passenger demand, low fares, higher fuel prices and soaring insurance and security costs -- are leaving the carriers with far too little income to cover their expenses.
AMR’s revenue was hit especially hard because of its widespread service to lackluster Latin American markets and because it’s a major carrier of business travelers, who have increasingly sought lower fares or reduced flying during the sluggish economy.
AMR said its loss included after-tax charges totaling $449 million, which mainly reflected severance packages for laid-off workers and write-downs in the values of American’s aircraft. Excluding those charges, AMR’s operating profit was $475 million, or $3.05 a share, in line with Wall Street’s forecasts. AMR’s third-quarter revenue fell 7% to $4.5 billion from $4.8 billion.
The airline said it “expects to post a sizable operating loss in the fourth quarter, most likely exceeding the third-quarter loss before special items.” AMR’s stock plummeted 59 cents to $3.89 on the New York Stock Exchange.
Separately, United Airlines parent UAL Corp. said it would not hold its normal quarterly conference call with analysts and the media Friday when it reports its third-quarter results. UAL, which faces a cash crunch that the airline says could land United in Bankruptcy Court, said it’s not ready to elaborate on its effort to quickly develop a recovery plan.
UAL is negotiating with its unions on wage cuts and other concessions as part of the plan, so that it can secure a $1.8-billion loan backed by the federal government. But the airline warned that “a Chapter 11 filing can’t be ruled out.”
