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American Loss Exceeds Estimates

DALLAS TheStreet) -- American (AMR) reported a second-quarter loss that exceeded what analysts had estimated and said higher fuel prices were largely to blame.

The carrier said it lost $286 million, or 85 cents a share. Analysts surveyed by Thomson Reuters had estimated a loss of 75 cents. Revenue rose 7.8% to $6.1 billion, in line with estimates.

In the same quarter a year earlier, American lost $11 million, or three cents a share.

Fuel costs, including the impact of hedging, rose 31% from a year earlier, the carrier said, adding $524 million to its costs.

American, the first major airline to report second-quarter earnings, is expected to be the only one to lose money. Peers Delta (DAL - Get Report) and United (UAL - Get Report) are expected to report profits, with United scheduled to report on Thursday and Delta scheduled to report on July 27.

In the long term, the aircraft order announced Wednesday should reduce American's fuel costs through the use of more efficient technology.

In the short term, CEO Gerard Arpey said the carrier will adjust its fall and winter schedules.

In the fall, American will make unspecified adjustments and will also cancel San Francisco-Honolulu and Los Angeles-San Salvador flying. In the winter, American will make seasonal adjustments on the transatlantic in conjunction with its joint venture partners. The carrier is also seeking a transportation waiver to suspend New York-Tokyo Haneda service through mid-2012.

American also said it would spin off American Eagle, distributing shares to current AMR shareholders. The arrangement would enable Eagle to compete for other carriers' regional flying.

During the quarter, consolidated passenger revenue per available seat mile rose 4.9%, while mainline PRASM grew 4.3%, despite extreme weather in Dallas and the continuing impact of the earthquake and tsunami in Japan.

On the cost side, cost per available seat mile excluding fuel grew by 2.1% as the company added capacity in select markets including Asia.

Looking ahead, American said full-year cost per available seat mile excluding fuel and the cost of any new labor agreements will increase by 0.5% to 1.5%. Mainline capacity will increase by 1.9%, with domestic capacity flat and international capacity up 5%. Consolidated capacity will increase by 2.6%.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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