Crippling fuel costs have forced AMR Corporation, the parent company of American Airlines, to post a net loss of US$1.4 billion for the second quarter of 2008.The second quarter results include special charges as previously disclosed in AMR’s Form 8-K filing with the Securities and Exchange Commission on July 2. These include a US$1.1 billion non-cash accounting charge to write down the value of certain aircraft and related long-lived assets to their estimated fair value and a charge of approximately $55 million of a total $70 million expected for severance-related costs resulting from the Company’s system-wide capacity reductions in the fourth quarter of this year.
The remainder of the severance-related charge is expected to be taken in the third quarter. Excluding these special charges, AMR reported a second quarter net loss of $284 million, or $1.13 per share.
The current quarter results compare to a net profit of $317 million for the second quarter of 2007.
Record jet fuel prices contributed significantly to the Company’s loss in the second quarter of 2008. AMR paid $3.19 per gallon for jet fuel in the second quarter compared to $2.09 a gallon in the second quarter of 2007, a 53 percent increase. As a result, the Company paid $838 million more for fuel in the second quarter of 2008 than it would have paid at prevailing prices from the prior-year period.
“Our company continues to be severely challenged by the fuel crisis that has afflicted our entire industry, and we expect these difficulties to continue for the foreseeable future,” said AMR Chairman and CEO Gerard Arpey. “Clearly, our second quarter results were disappointing, but I am also pleased with our efforts as a company to take difficult yet necessary steps to manage through this uncertainty. While we believe the airline industry cannot continue, in its current form, at today’s record fuel prices, we also believe our decisions and hard work by employees in recent years have better prepared us to face these challenges.”