Helped by Airline Fees, Fuel Costs AMR Corp. Posts Narrower Loss

American Airlines' parent company AMR Corp. (AMR) posted a narrower fourth-quarter loss Wednesday, helped by lower fuel costs and increases in revenue from passenger fees. Yet, results still fell short of Wall Street's forecast.
For the three months ended Dec. 31, the No. 2 U.S. airline by revenue posted a net loss of $344 million, or $1.03 a share, versus a loss of $347 million, or $1.24, in last year's fourth quarter. Excluding charges and other items, AMR's loss came in at $1.25 a share, wider than analysts' estimate for a loss of $1.22, according to Thomson Reuters.

Revenue fell more than 7% to $5.06 billion, hurt by capacity reductions and lower demand for air travel and cargo. Analysts, on average, were looking for revenue of $5.03 billion.

The first of the major airlines to report results, AMR said there were some slight glimmers of hope during the fourth quarter, including sequential improvement in its business from the third quarter to the fourth quarter. The company said year-over-year revenue declines also slowed, while costs dropped nearly 4%, lead by a $350 million decline in fuel expenses.

Looking ahead, the company expects modest capacity growth in 2010. Full-year mainline capacity -- which excludes regional partners -- is forecast to increase 0.9%, with a 3.2% increase in international capacity more than offsetting a 0.5% drop in domestic capacity.

"While the revenue and demand environment has remained challenging, the company's year-over-year declines in consolidated revenue, cargo revenue and mainline passenger unit revenue have narrowed sequentially in the third and fourth quarters," AMR said in a statement.

Airlines have been aggressively reducing capacity to make up for declining ticket prices, as well as adding fees for checked bags and other services. AMR said passenger yields, which reflect average ticket prices, fell 7.6% in the fourth quarter, but extra fees helped cushion the blow. Revenues from fees for such things as confirmed flight changes, purchased upgrades, buy-on-board food services and baggage service charges, grew 6.8% to $582 million in the most recent quarter.

Even with the drop-off in demand and traffic throughout the year, revenue from those aggravating sources brought in $2.3 billion in 2009, up 5.4% from 2008, the Fort Worth, Texas-based company said.

Now that AMR's earnings report is out of the way, investors will likely turn their attention to the company's attempts to keep bankrupt Japan Airlines (JALSY) in its Oneworld alliance. Rival Delta Air Lines (DAL) wants Japan's biggest airline to join its SkyTeam alliance.

For the full year, AMR reported a net loss of $1.47 billion, or $4.99 a share, narrower than 2008's loss of $2.12 billion, or $8.16 a share. Revenue fell more than 16% to $19.92 billion from $23.77 billion a year ago.
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