American Airlines parent beats loss estimates

Thanks in part to baggage fees, American Airlines' parent company lost less money in the last quarter than had been expected.BY MARY SCHLANGENSTEIN AND MARY JANE CREDEURBloomberg NewsAMR Corp., whose American Airlines is the dominant carrier in South Florida, reported a quarterly loss narrower than analysts' estimates as it reaped more in fees for checked baggage and fuel prices fell.The second-quarter loss was $390 million, or $1.39 a share, which includes $70 million in charges for grounding some Airbus SAS 300 jets and selling other planes, AMR said. Last year's second-quarter net loss was $1.5 billion, or $5.83 a share, which included a $1.1 billion reduction in the value of assets.While sales slid 21 percent, the $4.89 billion total beat the $4.6 billion projection by Helane Becker, an analyst at Jesup & Lamont Securities in New York. The results showed the benefits from American's $15 charge to check the first piece of luggage starting in 2008's second quarter. Fort Worth, Texas-based AMR also spent about $1 billion less for fuel as prices collapsed.Lower fuel and these bag fees have been good events for the airlines,'' said Becker, who advises buying AMR shares. AMR is the first major U.S. airline company to announce quarterly results, with its peers all scheduled to report next week.American filled 81.8 percent of its available seats, down from 82.5 percent a year earlier, as it shrank capacity and discounted tickets to attract leisure fliers. Passenger revenue for each seat flown per mile tumbled 16 percent.The global recession kept a lot of would-be travelers at home,'' Chief Executive Officer Gerard Arpey said in a memo to employees.While we have been able to keep our planes reasonably full, the competitive landscape prevented us from being able to charge fares sufficient for us to make money.''Dwindling revenue and an 8.2 percent drop in American's traffic overwhelmed gains such as a 7.4 percent increase in receipts from baggage and other fees, and a 58 percent plunge in the average price of a gallon of jet fuel from a year earlier.AMR reiterated plans to pare flying by 1 percentage point more than it initially projected, for a full-year cut of 7.5 percent.I see no evidence we would want to restore any capacity cuts we made,'' Arpey said in a conference call with analysts. ``We continue to look at capacity in the other light, in terms of whether we've done enough.''AMR's workforce was 7.6 percent smaller than a year earlier as the company shed the equivalent of 6,500 jobs, and will keep shrinking. AMR said in June it would drop at least 1,600 jobs as of Oct. 1 when summer travel demand wanes, and raised the prospect of future trims. The biggest reductions will be among flight attendants, with 1,200 positions being erased.Excluding one-time expenses, AMR lost was $319 million, or $1.14 a share.AMR's adjusted loss beat the average estimate for a deficit of $1.30 a share among 10 analysts surveyed by Bloomberg. On that basis, the loss a year earlier was $298 million, or $1.19 a share.The shares rose 18 cents, or 4.3 percent, to $4.36. AMR has dropped 60 percent this year.