AA Narrows Q1 Loss, Cuts More Capacity

AA Narrows Q1 Loss, Cuts More Capacity

AMR Corporation, parent company of American Airlines Inc., on April 20 reported a net loss of $436 million for the first quarter of 2011, compared to a net loss of $505 million in the first quarter 2010.

The company said it improved year-over-year results in spite of sharply rising fuel prices that increased 24 percent compared to the first quarter 2010. Including the impact of fuel hedging, AMR paid on average $2.76 per gallon for jet fuel in the first quarter of this year versus $2.23 per gallon in the first quarter 2010. As a result, the company paid $351 million more for fuel in the first three months of 2011 than it would have paid at prevailing prices from the corresponding prior-year period.

“High fuel prices remain one of the biggest challenges to our industry and our company. We believe our steps to aggressively increase revenues, reduce capacity, control non-fuel operating costs, and bolster liquidity will help us to better manage the challenges we currently face,” said AMR Chairman and CEO Gerard Arpey. “While we clearly must achieve better results as we continue to strengthen our business, we have made some meaningful progress. I want to thank our people for their commitment to serving our customers.”

American announced it plans to reduce its fourth quarter 2011 system capacity by an incremental 1 percent. This cut is in addition to the capacity reduction already announced in March. American now intends to retire at least 25 MD-80s in 2011, as part of the company’s plan to continue renewing its fleet, while addressing the current fuel environment.

American is currently embroiled in distribution battles on several fronts and noted that it was again doing business with Expedia, which had quit displaying American’s fares at the beginning of the year. The two entities are working together via American’s Direct Connect link by using aggregation technology provided by an unnamed GDS.

American also noted that it has filed an anti-trust suit against Travelport but said it will honor its existing contractual obligations with Travelport throughout the proceedings of this action and expects it will continue to do so for the foreseeable future. The airline said that it continues to have discussions with other GDS companies with the intent of distributing its content through these systems under competitive terms.