American Airlines parent posts loss on weak demand
CHICAGO (Reuters) - American Airlines parent AMR Corp posted a quarterly loss on Wednesday, capping a year of economic turmoil and weak travel demand that battered the industry.
But revenue declines were less severe than some analysts had expected, and the company's shares inched up more than 1 percent.
"The smaller declines in both revenue and (traffic) suggest that AMR has weathered the worst of the revenue decline," said Morningstar equity analyst Basili Alukos. "However, high labor costs hampered profitability."
AMR is the first major airline company to report results for the fourth quarter. Of the six largest carriers, only Southwest Airlines is expected to post a profit.
Experts blame relatively low fares for expected losses. The recession clobbered the industry during the year as demand for travel fell, especially among high-end business customers.
"The fuel crisis of 2008 was replaced by the worst recession in decades, which hurt travel demand severely, and tight capital markets," AMR Chief Executive Gerard Arpey said in a statement.
"We are hopeful that better times (lie) ahead," he said, "and we are intensely focused on returning to profitability."
Airline companies, including AMR, have benefited from capacity cuts and a series of new fees for products and services sold to passengers at the airport or during flights. Just this month, major carriers raised their unpopular bag-check fees.
FOURTH-QUARTER LOSS
AMR said its fourth-quarter net loss narrowed slightly to $344 million, or $1.03 a share, from $347 million, or $1.24 a share, a year earlier.
The results factor in $177 million in noncash special items, including write-downs of $96 million for route and slot authorities, mainly in Latin America, and $42 million for Embraer RJ-135 aircraft.
Excluding items, the loss was $1.25 per share, 3 cents wider than what analysts had expected, according to Thomson Reuters I/B/E/S.
Operating revenue fell 7.4 percent to $5.06 billion, while analysts were expecting $5.03 billion.
AMR ended the fourth quarter with $4.9 billion in cash and short-term investments, including a restricted balance of $460 million.
Mainline costs -- those for American Airlines -- were flat year over year, in part because of lower fuel prices. Excluding fuel, these costs rose 8.3 percent, driven by reduced capacity and higher pension expenses.
Mainline capacity, or available seat miles, decreased by 4.9 percent. American's mainline load factor -- or the percentage of total seats filled -- was 81.1 percent, compared with 78.3 percent a year earlier.
AMR said it expects its mainline capacity to increase by 0.9 percent in 2010, with a 0.5 percent decline domestically and a 3.2 percent rise internationally.
The company said its 2010 capacity increase will include the reinstatement of flights canceled in 2009 due to the H1N1 virus and to the launch of Chicago-Beijing service, which was deferred from 2009.
AMR expects mainline capacity in the first quarter to fall by 2.8 percent, with declines of 1.7 percent domestically and 4.5 percent internationally.
Shares of AMR were up 1.2 percent at $8.18 in morning New York Stock Exchange trading.
(Reporting by Kyle Peterson; Editing by Lisa Von Ahn)