"AMR Warns on Revenue"

Friday, September 24, 2004

AMR Cautious on Revenue
Dow Jones


Analysts widened their loss estimates for AMR Corp. after the American
Airlines parent warned of weaker-than-expected third-quarter revenue and
said it would need to renegotiate an $834 million credit pact, Friday's Wall
Street Journal reported. 

The gloomy outlook at American and its AMR Corp. parent, which staved off
bankruptcy last year with a turnaround plan that included major wage cuts,
underscores the fact that even one of the best-positioned big airlines
continues to be hit hard by high fuel costs and strong competition from
low-cost carriers. 

"Our cost-structure just isn't low enough yet for the harsh reality,"
Chairman and Chief Executive Gerard Arpey told a group of airline analysts
Thursday in New York. "We are continuing to wring both costs and complexity
out of our operation wherever possible." 

One possible revenue boost for American: taking back extra legroom it had
given to passengers in coach. The airline has already added back seats in
coach on certain fleet types and is studying whether to do so on more
planes, said Mr. Arpey. 

American warned of its revenue shortfall in a filing with the Securities and
Exchange Commission after the close of market on Wednesday. In addition to
mounting competition, the Fort Worth, Texas, carrier said August revenue was
hurt by hurricanes that will affect September revenue even more. As a
result, American's third-quarter mainline unit revenue -- the revenue
airlines collect spread over each seat-mile flown -- will fall between 2.5%
and 3.5% from a year earlier, the airline said.

American to reduce flights 

American Airlines is cutting some flights and considering charging for food
amid increasing fuel prices and intensifying competition from low-cost
carriers, the company's chief executive says.

Gerard Arpey's comments to analysts came a day after American parent AMR
Corp. said it was discussing refinancing an $834 million line of credit.
  
AMR said it needs additional relief since August revenue fell short of
expectations.

The Dallas-based airline narrowly avoided a bankruptcy filing in 2003, but
high fuel costs and low fares have slowed its rebound.

Arpey said American is making cautious plans for 2005, including reducing
some midweek and Saturday night flights at its Miami and Dallas hubs.


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