American Airlines parent AMR lost $344 million in fourth quarter

The Associated Press ~ staff The News
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DALLAS - American Airlines ended 2009 with a loss and could start 2010 with a thud if the carrier loses a key partner in the Asian market.
American's parent, AMR Corp., said Wednesday it lost US$344 million in the fourth quarter and nearly $1.5 billion for all of 2009 as traffic fell and many business travellers stayed home or bought cheaper tickets in the weak economy.
AMR raised cash and cut flights to combat a recession that sapped travel demand, and the company is bracing for another difficult year. American expects to raise capacity just 0.9 per cent in 2010, with all the increase on international routes.
American must also worry about fuel prices, which have doubled in less than a year.
AMR is the first major U.S. carrier to report fourth-quarter earnings, and analysts expect it to post the largest loss, followed by United parent UAL Corp. and Delta Air Lines Inc.
Excluding special items, including a tax gain, AMR said it would have lost $415 million, or $1.25 per share, in the fourth quarter. Analysts, who usually exclude items from their calculations, expected a loss of $1.23 per share.
Revenue fell 7.4 per cent, to $5.06 billion, slightly higher than analysts' forecast of $5.03 billion, according to Thomson Reuters.
Matthew Jacob, an analyst at Majestic Research, noted that traffic and revenue trends in the airline industry improved toward the end of last year. "Things are less bad than they have been," he said.
Jacob credited American with boosting "other revenues" by seven per cent by charging for food and checked bags, but he said that won't offset weakness in business travel.
"The airlines need to see a cyclical recovery driven by better economic conditions so businesses and corporations will travel more," he said.
In a note to employees, CEO Gerard Arpey said American is "seeing signs that business travellers, who cut way back in 2009, may be ready to take to the skies again."
But Southwest CEO Gary Kelly said last week that while business travel in late 2009 was better than earlier in the year, "it's still not good" and remains weaker than a year ago.
Now that the fourth-quarter accounting is done, investors will turn their attention to Japan, where American is scrambling to hold on to a valuable partnership with Japan Airlines.
JAL filed for bankruptcy protection on Tuesday, and reports in the Japanese press say the airline wants to dump American and form a partnership with Delta Air Lines. AMR hasn't said how much the loss of the JAL relationship would cost. Chief Financial Officer Thomas Horton has said AMR instead hopes to boost revenue by at least $100 million by deepening ties with JAL.
American is also waiting to learn whether U.S. regulators will approve antitrust immunity for an international joint venture with British Airways and other carriers. A decision had been expected last fall, but despite the delay, Arpey said Wednesday that American still expects its request to be approved.
For all of 2009, AMR lost $1.47 billion, or $4.99 per share, compared with a loss of $2.12 billion, or $8.16 per share, in 2008. Revenue tumbled 16.2 per cent to $19.92 billion, as $3.85 billion in revenue vanished with slow demand for travel. Spending on fuel fell 38 per cent, however, to $5.55 billion - a savings of $4.46 billion - as prices fell from record levels in 2008.
Shares of Fort Worth-based AMR, which also owns the American Eagle commuter airline, rose 5 cents to $8.13 in midday trading.

Organizations: AMR Corp., American Airlines, Delta Air Lines UAL Corp. Majestic Research Japan Airlines British Airways American Eagle

Geographic location: U.S., DALLAS, Japan

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