The Wall Street Journal-20080117-AMR Swings to a Loss- Expects More Fuel Pain
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AMR Swings to a Loss, Expects More Fuel Pain
American Airlines parent AMR Corp. swung to a fourth-quarter loss on record-high fuel prices and forecast that jet fuel will get costlier this year.
Most other U.S. airlines are expected to report fourth-quarter losses as rising revenue can't keep pace with skyrocketing bills for jet fuel. American paid $367 million more for fuel in the quarter than it would have at year-earlier prices.
AMR Chief Executive Gerard Arpey said during a conference call that American sees no problem with passenger demand, with ticket bookings now slightly ahead of last year. But the airline has planned conservatively by keeping a tight rein on growth and is prepared in case of passenger travel downturn, he said.
The Fort Worth, Texas, airline, the world's biggest by passenger traffic, said in a statement, "While record fuel prices contributed significantly to our fourth-quarter loss -- our first quarterly loss after six straight profitable quarters -- they are a reminder of the challenges we must continue to overcome as we strive for consistent and adequate profitability."
For all of 2007, AMR posted a net profit of $504 million.
AMR shares rose 42 cents, or 3.2%, to $13.62 in 4 p.m. New York Stock Exchange composite trading.
In a research note, J.P. Morgan analyst Jamie Baker called AMR's fourth-quarter results and financial forecasts "unremarkable." AMR likely will post a loss of $1 to $1.50 a share in the current quarter, he said.
AMR estimated its fuel cost averaged $2.12 a gallon in 2007. In 2008, the company expects a rise to $2.65 a gallon, including fuel hedges.
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John Flowers contributed to this article.
