American Airlines reports loss of $495 million in second quarter
DALLAS (AP) – American Airlines, the nation’s largest airline, said Wednesday that it lost $495 million in the second quarter and blamed the result on low fares, which it has used to stimulate demand. AMR Corp., American’s parent company, said the loss was $3.19 per share in the quarter ended June 30, compared with a loss of $507 million, or $3.29 per share, in the same period last year.
Excluding a charge for lost tax credits, the loss would have been $465 million, or $3 per share. On that basis, analysts surveyed by Thomson Financial/First Call had expected a loss of $3.04 per share.
Revenue was $4.48 billion, down 20 percent from the $5.58 billion of a year earlier and below the $4.61 billion expected by analysts.
“We continued to see a very weak revenue environment in the second quarter,” said Don Carty, AMR’s chairman and chief executive. He said passenger traffic has “rebounded nicely since last fall,” but average fares are at 15-year lows, sharply depressing profits.
The airline’s revenue rose and its net loss narrowed for the third straight quarter. Net loss has decreased from $798 million in the fourth quarter of last year to $575 million in the first quarter and $495 million in the second.
“It’s heading in the right direction,” said Helane Becker, an analyst with Buckingham Research Group. “On a sequential basis, the (second-quarter) numbers didn’t look bad. But the improvement isn’t as fast as people would like.”
Becker, who has a “neutral” rating on the company’s stock said the challenge for American and other major carriers is to improve profits by raising discounted fares. Several recent efforts to raise fares have faltered amid resistance from one or more rivals.
Investors remained concerned about the slow pace of recovery at the major carriers. In trading Wednesday afternoon, AMR shares fell 44 cents to $12.83, near their one-year low.
After the terrorist attacks of Sept. 11, in which two American jets were hijacked and crashed, the company cut the size of its fleet, delayed capital spending and laid off workers to deal with a drop-off in air travel.
The work force at AMR, which also owns TWA and the American Eagle commuter airline, has fallen from 128,000 to 112,000 in the past year. Carty said the airline has made progress controlling costs, “and we’re not done,” although he didn’t detail future cuts.
For the first six months of the year, Fort Worth-based AMR lost $1.07 billion, or $6.90 per share, compared to $550 million, or $3.58 per share in the first half of 2001. Revenue has fallen nearly 17 percent, to $8.62 billion from $10.34 billion. The June quarter results included a $30 million after-tax charge because it expects to lose tax credits for taxes already paid to other countries where the airline operates.
The loss of tax credits was a side effect of an accounting provision that Congress included in a post-Sept. 11 airline industry-bailout law.
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