AMR Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of American Airlines parent AMR (NYS: AMR) have plunged today, off by as much as 10%, as the company reported third-quarter earnings results.

So what: Operating revenue rose 9.1% to $6.4 billion, but high fuel costs weighed on the bottom line and the company saw a loss of $162 million, or $0.48 per share. Analysts were looking for revenue of $6.4 billion and a loss of $0.41 per share. AMR said fuel expenses jumped 40% from the prior year.

Now what: American Airlines was the only major airline to show a full-year loss last year and is on track to deliver another full-year loss this year. The company expects volatile fuel prices to continue to cause problems throughout the year. Consolidated passenger revenue per available seat mile increased 8.7% and, the company expects cost per available seat mile excluding fuel and labor costs will jump between 6.2% and 6.6%. Personally, I'll never buy an airline stock for exactly this reason: They are far too dependent on oil prices, which are far too volatile.

Interested in more info on AMR? Add it to your watchlist byclicking here.

At the time this article was published Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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