American and Continental airlines post losses; Beat expectation

By

Posted 2:12PM on Wednesday, January 16, 2002

The parent of American Airlines, the world's largest carrier, posted a record $798 million loss in the fourth quarter and Continental Airlines reported it lost $149 million in the same period as the airline industry was pummeled by the recession and fallout from the September terrorist attacks. But both airline companies beat Wall Street estimates for operating earnings before one-time items, however, and their shares were up at midday Wednesday. AMR Corp. American's parent, Fort Worth, Texas-based AMR Corp., said a downturn in business travel and lower fares contributed to its loss of $5.17 per share for the October-December period. It earned $47 million, or 29 cents a share, a year earlier, Excluding federal aid after the terrorist attacks and other special items, AMR lost $734 million, or $4.75 per share. On that basis, analysts surveyed by Thomson Financial/First Call had expected the carrier to lose $5.08 per share. Revenue tumbled to $3.8 billion for the quarter from $4.86 billion a year ago. ``Influenced by the lingering effects of last September's attacks, the final three months of 2001 were incredibly difficult,'' said Donald J. Carty, AMR chairman and chief executive. ``Traffic, particularly business travel, was down significantly in the quarter, which - when combined with lower average fares - resulted in a record quarterly loss.'' The Fort Worth-based company may have also been hurt by the November crash of one of its planes in New York. The crash left 265 passengers dead. Carty said the carrier has a long way to go to return to profitability, and he vowed an aggressive campaign to get back in the black. AMR cut 20,000 jobs after Sept. 11 and eliminated about 20 percent of its flights. Even with many fewer flights, planes flew lighter - occupancy fell nearly 5 percentage points to 64.8 percent. For the year, AMR lost $1.76 billion, or $11.43 per share, compared to earnings of $813 million, or $5.03 per share, a year ago. Revenue fell to $18.96 billion from $19.7 billion. In midday trading on the New York Stock Exchange, AMR shares were up 30 cents at $26.09 a share. Continental Airlines Inc. Houston-based Continental's loss amounted to $2.58 per share for the three months ended Dec. 31, a company record, and contrasted with a profit of $44 million, or 70 cents per share, a year earlier. Excluding post-Sept. 11 federal aid and other special items, the loss would have been $220 million, or $3.81 per share. Analysts had expected an operating loss of $4.49 per share. Revenue fell 28 percent to $1.63 billion from $2.28 billion a year ago. Chairman and chief executive Gordon Bethune said the federal aid approved by Congress and President Bush was critical. ``The airline industry as a whole would not have survived without their help,'' he said. For the full year, Continental lost $95 million, or $1.72 per share, in contrast to a profit of $342 million, or 5.45 a share. a year ago. Revenue fell to $8.48 billion from $9.31 billion a year ago. In midday trading on the NYSE, AMR shares were up 5.3 percent, or $1.56 a share, to $30.95.