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AMR Reports 3rd Quarter Profit

FORT WORTH (AP) ― The parent of American Airlines says it earned a third-quarter profit thanks to selling an investment business, but higher fuel costs pushed the company to an operating loss that was roughly in line with Wall Street expectations.

Fuel costs have eased in recent weeks, but Chief Executive Gerard Arpey said he has "serious concern" about economic uncertainty and how that could affect travel demand.

Arpey said American would cut capacity again next year by 6 percent, a move that could help push fares higher if other airlines go along.

American, the nation's largest airline, also said Wednesday it is pushing ahead with plans to upgrade its fleet with newer, more fuel-efficient jets. It will buy 42 Boeing 787-9 jets and has options for 58 more.

Parent AMR Corp. earned $45 million in the quarter that ended Sept. 30, helped by a $432 million gain from the sale of its investment business, American Beacon Advisors.

Without that sale and other one-time items, AMR would have lost $360 million, or $1.39 per share.

Analysts, who usually exclude one-time items from their predictions, expected the company to lose $1.40 per share, according to a survey by Thomson Reuters.

Revenue rose to $6.42 billion from $5.95 billion a year ago, beating the analysts' forecast of $6.34 billion.

A year ago, AMR earned $175 million, or 61 cents per share.

Fuel prices jumped to record highs in July, and AMR said it paid $1.1 billion more -- a 64 percent increase -- than it would have spent if fuel prices had remained at mid-2007 levels.

However, spot prices for fuel have tumbled nearly 40 percent since early July, from $4.21 per gallon to $2.57 last week, according to government figures, convincing some analysts that several airlines will turn a profit next year.

Noting the recent dip in fuel prices, Arpey, who is both chairman and CEO, said it would "shortsighted to conclude that fuel prices, which remain volatile, are no longer a challenge."

American and other airlines have been grounding planes, cutting unprofitable routes and laying off thousands of workers to cope with fuel costs. AMR has said it plans to eliminate more than 6,000 jobs, and spending on wages and benefits fell 5.1 percent in the third quarter.

Arpey said American and the American Eagle feeder service would continue to reduce the supply of seats that travelers can buy. He said 2009 capacity is expected to be 6 percent less than this year and more than 9 percent below 2007 levels.

Shares of AMR gained, as oil prices continued to slide Wednesday, offering even more hope that jet fuel prices will keep falling. AMR rose 38 cents, or 4.3 percent, to $9.17 in afternoon trading.

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