Wednesday, July 20, 2011

AMR

AMR Corp.'s second-quarter loss widened as the parent of American Airlines continued to see rising fuel costs hurt its results.
Shares rose 4.5% to $5.15 premarket as the airline also disclosed plans to spin off American Eagle and order more jets. The stock has fallen 28% over the past year, through Tuesday's close.
As expected, the company also announced plans to update its aging fleet by ordering 460 narrowbody aircraft from Boeing Co. and European rival Airbus, beginning in 2013. American has the largest aircraft-purchase program among the U.S. majors, with 35 Boeing 737s due to arrive over the next two years.
AMR also decided to move forward with the spin off of its American Eagle commuter unit. Last year, AMR said it may revive plans to spin off the regional arm, and in March it asked regulators to give American Eagle blanket rights to serve countries that have an open-skies deal with the U.S., a move that could sweeten the appeal of Eagle. American was the only one of the network majors to keep most of its regional flying in-house. Other airlines had opted to subcontract more flying, allowing them to secure more competitive deals.
AMR, the only major carrier not to turn a profit for 2010, has lagged some rivals of late. The company's loss narrowed in the last two quarters on revenue growth, though fuel costs pressured its bottom line. Airlines have largely benefited from a rebound in demand from 2009's recessionary levels, but continued growth could hinge on their ability to increase fares further.
AMR reported a loss of $286 million, or 85 cents a share, compared with a loss of $11 million, or three cents, a year earlier. Revenue jumped 7.8% to $6.11 billion.
Analysts polled by Thomson Reuters had most recently forecast a loss of 75 cents on revenue of $6.12 billion.
Aircraft fuel expenses jumped 31%.
American Airlines' passenger revenue per available seat mile, a key revenue gauge for the industry, rose 4.3%.
The airline's load factor, or the percentage of available seats filled, fell to 83.6% from 83.9% as a 1.8% increase in traffic came alongside a 2.1% bump in capacity.

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