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American Airlines parent posts $162M loss for 3Q
Question of the Day
DALLAS (AP) — Even higher fares couldn't pull American Airlines out of its financial nosedive.
American's parent, AMR Corp., said Wednesday that it lost $162 million in the third quarter, as fuel spending jumped 40 percent, wiping out higher revenue from fare increases and passenger fees.
The loss of 48 cents per share was wider than analysts' forecast for a loss of 43 cents per share.
Revenue totaled $6.38 billion, $30 million better than analysts expected, as American charged an average of 7 percent more on fares.
It was AMR's fourth straight losing quarter and 14th in the last 16. In last year's third quarter — often the strongest of the year for airlines because of heavy summer travel — AMR earned $143 million, or 39 cents per share.
AMR hasn't turned a full-year profit since 2007, and it has lost more than $12 billion since 2001, adding to speculation that it could be headed toward bankruptcy.
Chairman and CEO Gerard Arpey said the third quarter was "challenging for American Airlines," but said the company was moving aggressively to improve. The top goal, he said, was to control costs.
American has high costs, a heavy debt load, too many gas-guzzling planes in its fleet, and years of labor problems.
As other airlines merged and returned to profitability in the last two years, analysts and investors have grown impatient with AMR management, skewering executives for failing to show enough urgency in fixing American's problems.
The last few days provided another example of AMR's woes. The company raised expectations it would settle labor negotiations with American Airlines pilots and win money-saving schedule flexibility, but there was no weekend deal and AMR's stock fell 6 percent on Monday.
American and the pilots' union could still reach an agreement any day, allowing American to argue that it is doing something to control costs and boost productivity.
The airline is also taking steps to update its fleet. It announced in July that it will buy 460 new jets from Boeing Co. and Airbus over several years. That should reduce fuel and maintenance spending, but the improvement will be gradual.
AMR's stock price has fallen 64 percent this year — far more than any other major U.S. airline company — reflecting speculation that the company could be forced into bankruptcy protection like so many other carriers over the past decade.
Most analysts think that won't happen anytime soon because the company has about $4.3 billion in unrestricted cash and short-term investments that could be liquidated in a pinch.
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