- The Washington Times - Monday, April 13, 2009

FORT WORTH, TEXAS (AP) - American Airlines parent AMR Corp. reports first-quarter earnings on Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Air travel has fallen sharply this year as consumers and businesses spend less during the recession. The downturn has sent airline stocks into a nosedive _ none steeper than AMR _ since the start of the year.

Analysts expect most major U.S. airline companies, including AMR, to report that they lost money in the first quarter.

However, analysts expect AMR will rebound with profits in the next two quarters, helped by much lower prices for jet fuel than it was paying a year ago.

When AMR executives speak with analysts on Wednesday, investors will be listening for any news about future booking trends.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters predict AMR will post a first-quarter loss of $1.52 per share, or more than $400 million, on revenue of about $4.72 billion.

ANALYST TAKE: UBS analyst Kevin Crissey said AMR’s projected revenue per capacity, or available seat miles, was better than he expected but added, “Clearly this is still a bad number,” coming on top of declines in cargo and other revenue.

Analysts predict AMR will recover from the loss with profitable second and third quarters, and a small loss for the full year.

WHAT’S AHEAD: American is hunkering down in case travel demand remains depressed. A senior executive told employees recently that American has imposed a hiring freeze and won’t give raises to nonunion workers in the U.S. _ more than one-fourth of its work force.

The caution stems from American’s 12 percent decline in traffic during the first three months of the year. American cut capacity 8 percent during that time, but it still left planes with more empty seats than a year ago.

The traffic falloff has been worst on routes to Latin America and across the Atlantic, but domestic traffic fell nearly as much in March.

Senior Vice President Jeff Brundage said American was facing “unprecedented” decisions about spending and was having trouble borrowing money because of the credit crunch.

American is also bogged down in contract negotiations with its three unions, which represent pilots, flight attendants and ground workers. The unions have been stepping up their criticism of the company, including billboards and interactive advertisements that mocked CEO Gerard Arpey for his compensation package.

Federal mediators have been called in to help with all the negotiations. Contracts in the airline industry don’t expire, however, and federal law makes it difficult for workers to strike.

STOCK PERFORMANCE: AMR shares plunged 70 percent in the first quarter, falling from $10.67 to $3.19 as news of falling air traffic grew worse. That topped declines of 51 percent at Delta and Continental, 59 percent at United parent UAL, and 67 percent at US Airways.

AMR’s shares have ranged from $2.40 to $13.41 in the past 52 weeks.

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