American Airlines Reports $390 Million Quarterly Loss

American Airlines reported a second-quarter net loss of $390 million, but did see some revenue increases, specifically in fees for baggage, purchased upgrades, food bought on board and flight changes. Those revenues increased 7.4 percent to $565 million.

The quarterly results include the impact of approximately $70 million in non-recurring charges related to the sale of certain aircraft and the grounding of leased Airbus A300 aircraft prior to lease expiration. Excluding those non-recurring charges, the second quarter 2009 loss was $319 million, or $1.14 per share.

And the airline continues to struggle with an economy that sees consumers staying home unless airlines give them irresistible fares. Fewer people are flying and they are paying far less than they did a year ago; the airlines revenues are down 21 percent year over year.

American continues to reduce capacity; its mainline capacity declined 7.6 percent in the first quarter compared to the second quarter last year. The company expects second-half 2009 mainline domestic capacity to decline about 7.5 percent and international capacity to decline about 5.5 percent compared to the second half of 2008.

It’s addressing other challenges common throughout the industry –credit card fees- by entering into an amended agreement with one of its credit card processors that limits the amount of the reserve the processor can hold back from American’s credit card receivables through the end of 2009.

AMR reported second quarter consolidated revenues of approximately $4.9 billion, a decrease of nearly 21 percent year over year, largely driven by reduced capacity and the reduced demand for air travel and cargo resulting from the global economic downturn. In addition, the company estimates that the impact of the H1N1 virus reduced second-quarter revenue by approximately $50 million to $80 million.

American’s mainline load factor –or the percentage of total seats filled- was 81.8 percent during the second quarter, compared to 82.5 percent in the second quarter of 2008. American’s second-quarter yield, which represents average fares paid, decreased by 15.4 percent compared to the second quarter of 2008. The decrease in yield was largely due to more-aggressive pricing industry-wide and reduced traffic in the premium cabins.

American’s mainline cost per available seat mile (unit cost) in the second quarter decreased by 12.8 percent year over year, largely due to lower fuel prices. Taking into account the impact of fuel hedging, AMR paid $1.90 per gallon for jet fuel in the second quarter versus $3.19 per gallon in the second quarter of 2008, a 41 percent decrease.

As a result, the company paid $910 million less for fuel in the second quarter of 2009 than it would have paid at prevailing prices from the prior-year period. Excluding fuel, mainline unit costs in the second quarter of 2009 increased by 5 percent year over year, driven by costs related to reduced capacity, pension expenses, and investments in dependability initiatives.

AMR expects mainline capacity in the third quarter of 2009 to decrease by approximately 8.5 percent compared to the third quarter of 2008, with domestic capacity expected to decline by approximately 10.5 percent and international capacity expected to decline by approximately 6 percent compared to third quarter 2008 levels. AMR expects consolidated capacity in the third quarter of 2009 to decrease by approximately 9 percent compared to the third quarter of 2008.