AMR Posts $1.04-Billion Loss on Travel Slump, Fuel Prices

In the midst of a struggle to regain control of a tumultuous labor situation and ward off a bankruptcy filing, American Airlines’ parent AMR Corp. on Wednesday reported a $1.04-billion first-quarter loss.

The labor unrest and financial distress increases pressure on the company’s board to remove Chairman and Chief Executive Donald Carty, analysts said. The board is scheduled to meet today.

American canceled a conference call as Carty met again with labor leaders and four Texas congressmen to try to salvage cost-cutting deals that he said American needs to avoid a bankruptcy filing.

Workers and union leaders remain outraged after learning late last week that although they were asked to accept $1.8 billion in annual cuts, American approved executive bonuses and pension payments that would be protected if the company sought to reorganize its finances under Chapter 11.

Unions representing flight attendants and ground workers plan to hold new votes on the concessions, and the pilots’ union is threatening to withhold formal approval.

The quarterly loss was equivalent to $6.68 a share, compared with a loss of $1.56 billion, or $10.09, a year earlier. Analysts surveyed by Thomson First Call had expected a loss of $6.08 a share, or $948 million.

Carty blamed the first-quarter results on weak travel demand caused by the sluggish economy, war in Iraq and the SARS outbreak. He also said high fuel prices and low fares contributed to results that were “truly dreadful.”

Revenue fell slightly to $4.12 billion from $4.16 billion a year earlier.

Fort Worth-based AMR shares rose 37 cents to $3.80 on the New York Stock Exchange.

The Dallas Morning News reported Wednesday that board members were unhappy with Carty’s failure to tell unions about the executive benefits. The company declined to comment.

Ray Neidl, an analyst with Blaylock & Partners, said the dismal first-quarter numbers added to Carty’s problems.

“It puts pressure on Don,” Neidl said. “The board views him as a very valuable manager, having structured these consensual agreements, and they want to give him every chance to put this back together.”

Neidl said Carty must show the board he can rescue the cost-cutting deals with unions, but union leaders have spoken harshly of his failure to tell them about the executive perks.