AMR Corp narrows losses despite fuel price rise

AMR Corp narrows losses despite fuel price rise

AMR Corp reported a first-quarter loss of $436 million earlier, as a 24.8 per cent increase in the price of fuel overcame higher air fares.

The parent of American Airlines recorded a 9.2 per cent increase in revenue for the period, taking the total to $5.53 billion.

“Other revenues” – which includes baggage fees, reservation change fees and on-board food charges - were $653 million, an 11.6 per cent increase compared with the same quarter last year.

“High fuel prices remain one of the biggest challenges to our industry and our company,” said AMR Corp chairman Gerard Arpey.

“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.

“While we clearly must achieve better results as we continue to strengthen our business, we have made some meaningful progress.”

As costs rose, AMR Corp reduced fuel consumption to 597 million gallons, down 0.3 percent from the same quarter last year.

But fuel prices that averaged $2.75 in the quarter, a 23.6 per cent increase compared with the 2010 first-quarter average of $2.22 per gallon.

Arpey also took time out to write to American Airlines employees to discuss the results.

In a letter to employees he said the results were “certainly disappointing”, but not surprising given the airline’s “litany of challenges” in the first quarter.

“In the first quarter alone, we paid $351 million more for fuel than we would have at last year’s prices,” Arpey told employees.

“I know it is beyond frustrating to see the fruits of our labour wiped out by something over which we have seemingly little control.

“We are working hard on a number of fronts, through our Fuel Smart conservation initiatives and systematic hedging program, to mitigate the impact of increasing fuel costs on our financial performance.”