NEW YORK (CNNfn) - AMR Corp., the world's largest airline company, said Friday it expects to log a third-quarter loss considerably larger than its second-quarter loss, citing continuing economic weakness, high fuel prices and increased labor costs.†|
The company also warned of a significant loss in its fiscal fourth quarter, and said it would cut its fleet even deeper than expected.
Shares of AMR (AMR: down $1.24 to $29.91, Research, Estimates) fell about 4 percent following the midday warning.
The company, which operates both American Airlines and recently-purchased Trans World Airlines, did not give specific loss per share guideline. Analysts surveyed by earnings tracker First Call were looking for a third-quarter loss of 39 cents a share, which was little more than half of the 68-cent-a-share loss posted in the second quarter, rather than considerably larger. The company made $1.75 a share in the third quarter of last year.
Analysts were looking for a fourth-quarter loss of 60 cents a share, compared with the year-ago earnings per share of 34 cents.
AMR announced it was retiring five more Boeing 727 aircraft earlier than originally planned in a move to adjust capacity to fit falling demand. It also announced it had passed on purchasing aircraft that it had options to buy which would have been delivered in 2002 and 2003. It did not identify the aircraft on which it would not exercise its options, however.
The company announced last month that a decline in demand for air travel would lead it to cut the size of its fleet by about 1 percent next year.
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All the major airlines have been hit by a steep drop in demand for air travel, particularly by its top-paying business customers. Analysts now forecast third-quarter profits for only three major airlines: Northwest Airlines (NWAC: down $0.12 to $20.03, Research, Estimates), Continental Airlines (CAL: down $2.25 to $40.10, Research, Estimates), †and Southwest Airlines (LUV: down $0.79 to $16.96, Research, Estimates).
All major carriers other than Continental and Southwest have reported losses for the first two quarters of the year. Total industry losses are now expected to top $2.0 billion this year, and one analyst, Glen Engel of Goldman Sachs, said earlier this week that he believes losses will reach $3.4 billion.