American Airlines Reports First Quarter Losses

American Airlines has had its share of troubles recently. It has been struggling with the management of the labor unions over new contracts. Airline traffic is down, meaning less people are using their services. AA has also had trouble securing credit. Now, in their first quarter profit reports, AMR Corporation, parent company of AA, indicated that they had lost nearly $375 million (or $1.35 per share) in the first quarter.

While fuel has been significantly cheaper, this has not helped AA off-set the cost of lower traffic volume. AMR is the first of the big airline companies to report their earnings after the end of the quarter. All the other major carriers are expected to show sharp losses in profits as well.

The sharp drop in traffic has also had another effect on the industry, which could be good for consumers. With the U.S. in a recession, the airlines have not been able to raise their airline prices or fees. This has caused something of a fare war between the carriers, keeping prices low. Airlines are also offering unprecedented deals in an effort to lure back consumers.

But, while the losses seem street, Wall Street analysts were actually expecting AMR to lose closer to $1.68 per share on revenue of approximately $4.73 billion. Many experts are predicting that the airline industry may have hit bottom in the first quarter and that there may be brighter days to come in the future. AMR just received funding to add two new airplanes to their fleet, which may be a good sign that credit in this industry is opening up.

Plus, with all the airline companies cutting routes or eliminating the number of flights to certain destinations combined with lower fuel costs, many industry experts expect that costs in the second quarter will be much lower than the first quarter. It’s too early to tell, however, what impact this will have overall. If the other airline companies’ losses are steeper than AMR, this may spell more trouble for the airline industry.

Posted by 7a'faR