AMR Corp. (NYSE: AMR): Third Quarter Earnings Preview 2010
Monday, October 11, 2010 1:12 PM

AMR Corp. (NYSE: AMR), the third largest US carrier, is scheduled to report third-quarter results on Wednesday, October 20, 2010. Analysts, on average, expect the company to report earnings of 35 cents a share on revenue of $5.84 billion. In the year ago quarter, the company reported a loss of 93 cents per share on revenue of $5.13 billion.
AMR Corporation, through its subsidiaries, operates as a scheduled passenger airline in the United States. The company, through its principal subsidiary, American Airlines, Inc., provides scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe, and Asia. American Airlines also operates as a scheduled air freight carrier, providing a range of freight and mail services to shippers.

In the preceding second quarter, the Fort Worth, Texas-based company's net loss was $10.7 million, or 3 cents per share, compared to a net loss of $390 million, or $1.39 per share, in the year-earlier quarter. On an adjusted basis, the company posted a loss of $1.13 cents per share in the second quarter. Total operating revenues increased 16% to $5.67 billion from $4.89 billion in the same quarter last year. Analysts, on average, expected the company to report a loss of 1 cent per share on revenue of $5.69 billion. AMR expects consolidated capacity in the third quarter to grow by 3.4%. AMR expects full year 2010 consolidated capacity to increase by 1.2%.

The company's monthly air-traffic trends have continued to improve.  AMR Corp's principal subsidiary American Airlines recently reported that its traffic for September increased 5.6% to 10.05 billion revenue passenger miles or RPMs from 9.52 billion RPMs in the prior year month. The airline's August system traffic rose 3.1% to 11.51 billion revenue passenger miles or RPMs from 11.17 billion RPMs in the same period last year. Similarly, its July system traffic rose 2.7% to 11.97 billion revenue passenger miles or RPMs from 11.66 billion RPMs in the same period last year.
Overall, the airline industry has benefited from an uptick in travel demand as well as a rebound in economic activity. The International Air Transport Association recently said that it expects 2010 industry profit to be more than three times of the previous forecast. The trade group said the sector would earn 8.9 billion dollars in 2010, up from its previous forecast of 2.5 billion dollars made in June.

Among other developments, AMR Corp. signed an agreement to start a transatlantic joint business with Europe's third largest airline British Airways plc, and Spanish carrier Iberia Lineas Aereas de Espana SA. The company said that the business is expected to be worth a combined US$7 billion in annual revenues. In addition, American Airlines received approval from the U.S. Department of Transportation to begin new service between Los Angeles and Shanghai. The airline plans to launch the new daily flights on April 5, 2011, using 247-seat Boeing 777 aircraft, which feature 16 First Class, 37 Business Class and 194 Economy Class seats.

In terms of stock performance, AMR shares have lost nearly 18% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.


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