NEW YORK - American Airlines parent AMR Corp posted a deeper-than-expected third-quarter loss today as high fuel prices outweighed fare increases and warned of a significant loss in the final quarter.
But the No. 1 US airline's shares bounced higher after it also detailed plans to cut more than US$500
million ($709.11 million) in additional costs beyond more than US$700 million in cuts this year and add US$300 million in revenue next year.
"We either need to lower our costs or drive higher revenues or achieve some combination of both," American CEO Gerard Arpey said in a conference call in which the airline disclosed it expects fuel costs to rise by US$1.1 billion, or 24 per cent, in the fourth quarter.
AMR reported a third-quarter net loss of US$153 million, or 93 cents a share, compared with a loss of US$214 million, or US$1.33 a share, a year earlier.
The loss for what is typically one of the industry's strongest periods, followed a US$58 million profit in the previous quarter.
"Obviously it's a disappointment," said William Warlick, senior director at Fitch Ratings.
"Clearly, as was the case with Continental, the fuel cost pressures are offsetting the yield performance entirely."
On Tuesday, Continental reported a better-than-expected quarterly profit of US$61 million. But its shares fell 2 per cent, the industry's top decliner, on concern that the airline could face a cash crunch late next year or early in 2007.
- REUTERS
