| hitting an air pocket
Fort Worth, Texas, Oct. 17 (Reuters): American Airlines on Wednesday reported a third-quarter net loss of $ 924 million, despite a cost-cutting campaign aimed at helping the world’s largest carrier recover from hits the industry took after the September 11 attacks on the United States.
American has lost more than $ 2.5 billion since the attacks last year as the airline industry remains mired in a historic slump driven by decreased demand for air travel. The company said it planned to further slash costs by deferring delivery of 34 Boeing airplanes over the next three years.
“Any way you look at them, these are terrible financial results that reflect a sluggish economy, continued weakness in the revenue environment, high fuel prices, the cost of enhanced security and the uncertainty of events in the Middle East,” chairman and chief executive Don Carty said.
American’s parent, AMR Corp, posted a third-quarter net loss of $ 5.93 per share, compared with a net loss of $ 414 million, or $ 2.68 per share, a year ago. Excluding special items, AMR’s loss was $ 475 million, or $ 3.05 per share. According to Thomson First Call, American was expected to lose $ 3.06 a share, with loss forecasts ranging from $ 2.60 to $ 3.45 a share.
The company said its total operating revenue had increased to $ 4.94 billion in the quarter from $ 4.82 billion a year ago. It added, however, that its fourth-quarter loss was likely to exceed the third-quarter loss, before special items.
Wall Street did not look favourably at the results, sending AMR shares down almost 12 per cent to $ 3.95 on the New York Stock Exchange. The shares were off by about 8.5 per cent before the company released its earnings around midday.
Over the past year American has announced cost-cutting measures it believes will lead to $ 1.1 billion in savings as it aims to have permanent cost reductions of $ 3 billion.
Toward that end American said it had reached an agreement with Boeing for the deferral of a total of 34 airplane deliveries during 2003, 2004 and 2005.
Under the agreement, American will take delivery of only 11 planes in 2003 — nine 767-300s and two 777s — compared with the original plan of 19, it said. No aeroplanes will now be delivered to American in 2004 and 2005.