Majestic Research

Associated Press

AMR Lost $344 Million in Fourth Quarter

By DAVID KOENIG
Published: January 20, 2010

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 $344 million in the fourth quarter and nearly $1.5 billion for all of 2009 as traffic fell and many business travelers 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 said it expects to raise capacity just 0.9 percent in 2010, with all the increase on international routes.

American must also worry about fuel prices, which have doubled in less than a year.

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 percent, 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.

“The airlines need to see a cyclical recovery driven by better economic conditions so businesses and corporations will travel more,” he said.

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. That would mean a big decline in revenue for American — chief financial officer Thomas Horton has said it would top $100 million, and analysts have estimated as much as $750 million a year.

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, CEO Gerard 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 percent to $19.92 billion, as $3.85 billion in revenue vanished with slow demand for travel. Spending on fuel fell 38 percent, 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 4 cents to $8.12 in morning trading.