|AMR, which owns American Airlines, and UAL, which runs United, were the first US airlines to report fourth-quarter results yesterday. Delta Air Lines Inc. is slated to release results Jan. 27. (Donna McWilliam/ Associated Press/ File 2006)|
More flight cuts will follow losses
Demand fell in 4th quarter at United, American
ATLANTA - American Airlines parent
American, the second-largest US airline, and number three United trimmed capacity last year as jet-fuel costs soared and have continued to scale back as the recession curbs travel. Demand is "under pressure" across the industry, with some customers flying less and others switching to cheaper coach fares, United said yesterday.
"It's very hard to be optimistic about travel demand given what we know about the economy," said Dan Kasper, managing director of economic consulting firm LECG LLC in Cambridge, Mass. "Maybe expectations for the airlines were a little more optimistic than warranted."
AMR's net loss was $340 million, or $1.22 a share. The deficit was wider than analysts expected. UAL's net loss was $1.3 billion, or $9.91 a share, after incorrectly betting that jet-fuel prices would rise.
United said it will cut 1,000 additional jobs as it prepares to trim flying by as much as 9.5 percent this year.
"These times are challenging and demand is under pressure across the industry," said John Tague, United's chief operating officer. "We are in a better position to deal with this recession than ever before."
American said last month that it was "nervous" about demand for February and March.
The loss at AMR widened from $69 million, or 28 cents a share, a year earlier, according to its statement. Sales fell 3.8 percent to $5.47 billion, the first decline in six quarters.
Excluding costs of $23 million, the loss was $214 million, or 77 cents a share, AMR said. That was wider than the average 70 cents of 13 analyst estimates compiled by Bloomberg.
Replacing older planes has helped "put us on a sounder footing," chief executive Gerard Arpey said.
UAL's loss widened from $53 million, or 47 cents a share, a year earlier. Revenue declined 9.6 percent to $4.55 billion, the first drop in seven quarters.
Excluding items related to fuel-hedge contracts and other one-time costs, the loss was $555 million, or $4.22 a share, the company said.
That was narrower than the $4.41 average of 12 analyst estimates compiled by Bloomberg.