First-quarter resultater i US

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American posts $328 million first-quarter loss, offers dim full-year outlook

American Airlines parent AMR Corp. launched the US first-quarter reporting period on a decidedly down note yesterday, posting a $328 million net loss compared to an $81 million profit in the year-ago quarter and projecting a difficult 2008 owing largely to "very volatile" fuel costs.

"There's really no playbook for $110 oil," Executive VP-Finance and Planning and CFO Tom Horton conceded. "That means the revenue and expense equation is broken." AA domestic mainline capacity will be trimmed for the remainder of the year, including by 4.6% year-over-year in the fourth quarter, to help defray fuel costs, he said. He added that if crude oil prices continue climbing, AA likely will "take a sharp pencil to capacity plans" and consider further cuts.

Chairman and CEO Gerard Arpey said that cost cuts in recent years put AA in a position to weather hard times. But he added that record fuel costs have created a "new reality" that will "present a significant challenge for the foreseeable future. . .Our unit revenue is in no way keeping pace with the extraordinary price of oil."

Adding to its woes were 3,300 flight cancellations last week owing to required MD-80 inspections (ATWOnline, April 14). The cost of the groundings is estimated to be in the "high tens of millions of dollars" and will be reflected in second-quarter results, Horton said.

First-quarter revenue rose 5% to $5.7 billion but expenses lifted 13.6% to $5.88 billion including a 45.4% leap in fuel costs to $2.05 billion. Operating loss was $187 million, reversed from a $248 million profit in the year-ago period. Mainline traffic dipped 0.3% to 32.49 billion RPMs on a 1.5% drop in capacity to 41.05 billion ASMs, producing a load factor of 79.1%, down 1 point. Passenger yield increased 5.1% to 13.48 cents as PRASM lifted 6.5% to 10.67 cents and CASM jumped 15.8% 12.63 cents. CASM ex-fuel was 8.11 cents, up 3.3%.

AA plans to "accelerate" replacement of MD-80s with more fuel efficient 737-800s and "plans" to take delivery of 34 in 2009 and 36 in 2010. Arpey said he's not concerned about AA losing its status as the world's largest airline owing to mergers (ATWOnline, April 16). "Size is not the issue," he said. "The real factor is being profitable. . .We've got to get supply and demand to the point where we recover our costs."

by Aaron Karp