Instead of passengers, U.S. airlines have been toting losses. And the second-quarter results from
, the parent company of American Airlines, the world's largest carrier, were no exception.
On Tuesday morning, AMR announced a second-quarter loss of $465 million before special items, or $3 a share. The results fell a penny short of what analysts expected, on average. The losses are growing wider at AMR, which had a net loss of $105 million before special items, or 68 cents a share, in the same quarter a year-ago.
"We continued to see a very weak revenue environment in the second quarter," said Donald Carty, AMR's chairman and CEO, in a prepared statement. "Although traffic has rebounded nicely since last fall, average fares are at 15-year lows, sharply depressing yields."
In the months after Sept. 11, discounting was used to lure skittish travelers back to the skies, an effective tactic that has help fill planes, but not airline coffers.
as with Tuesday's release from
, heavily discounted fares helped produce a revenue shortfall. In the second quarter, American's revenue was $3.747 billion, down $900 million, or 19.3%, from the same quarter last year and $860 million lower than analysts' estimates.
Heavy discounting has left airlines unable to raise ticket prices. So far this year, carriers have aborted three attempts to raise fares because a carrier refused to go along with the increase.
All told, AMR has lost more than $2 billion since Sept. 11, with the second quarter marking the sixth-consecutive quarter without a profit, which won't change anytime soon. The company said it expects to post a sizable operating loss in the third quarter, citing a weak business travel market, overcapacity and steep discounting for the shortfall.
To combat the losses, AMR said it will trim back capacity, reduce capital expenditures and lower operating costs.
"We've made good progress on the cost side and we're not done," Carty said. "The company is in the midst of an exhaustive, top-to-bottom review of its business, and despite our financial challenges, our employees are doing an outstanding job."
In midday trading, AMR was down 22 cents to $13.05. Other airlines followed suit, with
off 30 cents to $16.96,
, parent of United, off 21 cents to $8.10, and
losing 8 cents to $3.50.
Continental was unchanged at $11.60, while
was up 15 cents to $9.65. Discount airlines were mixed, with
up 15 cents to $13.90 one day before it will release earnings, and
off 7 cents to $44.18.