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Sep 18, 2008 11:38 am US/Central
AMR: Fuel Costs Falling, Revenue Measure Rising
FORT WORTH (AP) ―
The parent of American Airlines said Thursday that a key revenue measurement is rising and its fuel bill is falling.
American said it expects third-quarter revenue per mile flown by paying customers to rise between 9.5 percent and 10.5 percent from a year ago.
Parent AMR Corp. said in a regulatory filing that including the American Eagle commuter carrier, the companywide increase in so-called unit revenue will range between 9.4 percent and 10.4 percent.
The company said cargo and other revenue would "increase substantially" over the same period in 2007.
AMR also said it expects to pay about $2.7 billion for fuel in the third quarter -- -- $200 million less than it had forecast in July. However, that would still be nearly $1 billion more than it spent on fuel a year earlier.
The company said it would pay an average $3.55 per gallon instead of the $3.81 it had predicted two months ago. That figure was helped by fuel hedging -- AMR said it hedged 39 percent of its fuel for the third quarter at an average cap of $3.11 per gallon.
AMR now expects to spend $9.46 billion on fuel for all of 2008, down from a July forecast of $10.2 billion. For the full year, AMR hedged 37 percent of its fuel at an average cap of $2.77 per gallon.
Fort Worth-based AMR said it expects to end the quarter on Sept. 30 with about $4.9 billion in cash and short-term investments, including $455 million in restricted cash.
The company ended the second quarter with $5.5 billion in cash and short-term investments, including $434 million in restricted cash.
AMR treasurer Beverly Goulet said the recent decline in oil prices has helped the company, "but the questions about the steady-state price of fuel and the direction of the economy are as yet unanswered."
American has been raising fares and fees, cutting capacity -- but has no plans to close hubs, Goulet said -- and retiring dozens of planes. Still, AMR lost nearly $1.8 billion in the first half of this year.
Asked whether AMR's tax situation would affect a fleet upgrade, Goulet replied, "It will be a substantial number of years before we pay taxes."
AMR shares rose 21 cents to $11.35 in midday trading.
(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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