AMR Falls on Fuel-Price Warning

Updated from August 26

AMR AMR shares fell Friday after the parent of American Airlines warned late Thursday that the high price of fuel will eat into earnings for the second half of the year, while unit revenue growth will come in below last year's levels.

In a filing with the Securities and Exchange Commission after the close of trading on Thursday, the world's largest carrier raised its third-quarter fuel price guidance to $1.25 a gallon from $1.20 a gallon and said fuel would come in at $1.17 a gallon for the fiscal year, up 4 cents from prior expectations. In reaction to the news, shares of AMR dropped 49 cents, or 5.2%, to $8.85.

"Given the continued escalation in this year's fuel prices, we now anticipate spending over $300 million more for fuel during the third quarter than we would with last year's fuel prices," said the company, in its filing. "For the full year, the additional expense associated with these record-high fuel prices is approximately $1 billion."

Ultimately, the carrier said that cost per available seat mile, also known as CASM, would come in at 9.68 cents, more than 3 cents higher than costs at Southwest Airlines LUV and JetBlue JBLU. At the same time, the carrier warned that revenue per available seat mile, a key metric also known as RASM, would come in below last year's levels.

Analysts expect the carrier, which won't release third-quarter earnings for at least six weeks at the very earliest, to lose 12 cents a share on $4.8 billion in revenue.