AMR Lowers Guidance, Citing Sluggish Economy, High Fuel Costs
AMR
(AMR)
expects to lose more than $100 million in the second quarter because of high fuel prices and the continued effects of a sluggish U.S. economy.
The company, the parent of
American Airlines
and
TWA
, also said it will take a $425 million charge in the second quarter to write down a number of aircraft.
Analysts polled by
Thomson Financial/First Call
are expecting the Fort Worth, Texas, company to earn 41 cents a share in the period, down from $1.75 in the year-ago second quarter.
AMR also expects a loss for the full year if current conditions persist. "The softening U.S. economy has driven a sharp reduction in demand for business travel," the company said in a statement. " At the same time, fuel prices remain persistently high. We don't foresee a near-term recovery in demand so we expect the balance of the year to be very challenging." Wall Street is expecting earnings of $1.84 for the year, well short of the bottom line of $4.65 last year.
Additionally, the company said it will retire 22 aircraft in the first quarter of 2002 in order to better match supply with demand. The aircraft were already scheduled to leave the fleet during the course of the next three years. These actions will decrease capacity for 2002 by about 1%, the company said.