American Airlines buffeted by high fuel bill. - AP
AMR Corp, the parent of American Airlines, swung to a big loss in the second quarter as high fuel prices swamped an increase in revenue.
Still, the results are not as bad as Wall Street had feared. The airline company also reported a write down of assets.
Continental Airlines on Thursday also reported quarterly losses of US$3 million, or three cents per share, compared with a profit of US$228 million, or US$2.03 per share, a year ago.
On Monday, Fitch Ratings announced that it had revised its outlook on United States carriers to negative, saying high fuel prices and slowing demand for travel have raised the risk that airlines could default on aircraft leases.
Fitch said downgrades were likely to outnumber upgrades over the next year.
Pressure
The ratings agency said fuel costs and waning demand could pressure the airlines to write down the values of their planes. Fitch revised its asset-performance outlook for aircraft securitisations to declining and said downgrades were most likely to cover older, less fuel-efficient aircraft.
AMR said it will take a charge of US$1.1 billion to US$1.2 billion in the second quarter to cover the lower value of its MD-80 and Embraer RJ-135 fleets. The MD-80s are heavy fuel burners.
Last Friday, Continental said it would take a non-cash charge of about US$51 million to write down the value of Boeing 737 fleets, and it warned of more write-downs in the third quarter.
Jet fuel prices, the largest single cost for most airlines, have risen more than 50 percent this year.
For the three months ending June 30, AMR said Wednesday it lost US$1.45 billion, or US$5.77 per share, compared to a profit of US$317 million, or US$1.08 per share, a year ago.
Excluding the special charges to write down the value of its aircraft fleet, AMR said its losses would have been contained to US$284 million, or US$1.13 per share.
Analysts, who typically exclude one-off charges from their forecasts, expected AMR to lose US$1.40 per share.
Revenue rose 5.1 per cent, to US$6.18 billion, a third of which was consumed by fuel costs, which spiked 47.4 per cent to US$2.42 billion - an increase of nearly $800 million from a year ago.
