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News > Companies
AMR warns of 2Q loss
June 18, 2001: 5:27 p.m. ET

American Airlines parent sees $100M 2Q loss, cites economy, fuel prices
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NEW YORK (CNNfn) - American Airlines parent AMR Corp. said Monday it expects to report a $100 million second-quarter loss instead of a profit as the sluggish economy, soaring fuel prices and one-time charges slice into profit.

The company, which also said it's at risk of missing full-year estimates if conditions persist, did not provide a revised per share estimate, but analysts surveyed by earnings tracker First Call anticipated earnings of 41 cents a share in the current quarter.

Air carriers have been hit hard by the slowing economy as companies looking to cut costs to remain profitable have significantly slashed corporate travel expenditures in addition to laying off thousands.

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AMR's warnings comes two weeks after a report that showed miles flown by paying passengers fell 1.8 percent while the load factor fell to 71 percent from 74.9 percent a year ago. The load factor reflects the percentage of seats filled with passengers on a per-mile basis.

"The softening U.S. economy has driven a sharp reduction in demand for business travel," AMR Chief Financial Officer Tom Horton said. "At the same time, fuel prices remain persistently high. We don't foresee a near-term recovery in demand so we expect the balance of the year to be very challenging."

The company also expects to take a $425 million after-tax charge in the quarter related to the writedown of aging aircraft to be retired from its fleet.

AMR is also retiring 22 aircraft from TWA LLC, which the company recently acquired, including the entire fleet of 19 DC-9s. Retiring the aircraft is expected to help cut costs by eliminating the maintenance on those aircraft.

AMR (AMR: Research, Estimates) shares ended up 64 cents at $35.92 Monday. graphic

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