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DALLAS — American Airlines is losing less money these days, but it's still on a losing streak that's approaching two years.
Parent AMR Corp. said Wednesday it lost $10.7 million in the second quarter.
That's a big improvement for American, the nation's second-largest airline, from last year's loss of $390 million. Still, American's loss stands out against big profits reported this week at rivals Delta and United.
American blamed the loss on a 24 percent jump in spending on jet fuel but rivals are contending with high fuel costs as well. American is also devoting a greater percentage of its revenue towards labor than Delta and United while playing catch-up with those rivals on international revenue.
The airline was able to partly offset the fuel bill with higher prices — the average fare rose 14 percent from a year ago.
American is pinning its hopes for recovery on a strategy of focusing flights at a handful of big hub airports and boosting revenue by working more closely with international partners. On Tuesday, U.S. antitrust regulators gave the company permission to cooperate with British Airways and others in setting fares and schedules on flights between the U.S. and Europe.
American also said Wednesday it ordered 35 more Boeing 737-800 jets as it upgrades its fleet and phases out gas-guzzling older McDonnell Douglas planes. The airline had already ordered 84 737s, which it started receiving in April 2009. The company didn't disclose price or financing details.
And the company promoted chief financial officer Thomas W. Horton to president, where he will also oversee sales and marketing. AMR's top sales and marketing executive was recently assigned to oversee the possible sale of regional flying subsidiary American Eagle.
AMR said Bella Goren, a marketing senior vice president, would replace Horton as CFO.
AMR's loss in the April-through-June quarter amounted to 3 cents per share. Revenue rose 16 percent from a year ago, to $5.67 billion.
Analysts expected a loss of a penny per share on $5.69 billion in revenue.
AMR ended the quarter with $5.5 billion in cash and short-term investments, up from $3.3 billion a year ago.
It was the Fort Worth company's best quarter since mid-2008, when it earned money by selling an investment business. Excluding that windfall, AMR hasn't had a winning quarter since mid-2007 and has lost more than $4 billion since the start of 2008.
AMR's loss compared with second-quarter net income of $467 million at Delta Air Lines Inc. and $273 million at United Airlines parent UAL Corp.
American executives argue — and some analysts agree — that AMR faces higher labor costs because unlike those rivals, it didn't use bankruptcy to cut wages and dump pensions. American's unions, locked in bitter negotiations for new contracts, hotly dispute that claim. They want raises to offset wage cuts back in 2003.
Michael Derchin, an analyst with CRT Capital Group, said American also is at a disadvantage because unlike Delta and United, it hasn't had antitrust immunity for joint ventures with foreign airlines. Now that American's deal with British Airways has been approved, he expects American to get more revenue from international routes.
Derchin said union contracts also have limited American's ability to shift more flying to smaller regional carriers with lower labor costs.
Derchin said American is taking other steps to fix its business, such as striking a frequent-flier exchange with JetBlue Airways to funnel more Europe-bound passengers to American flights leaving from New York and Boston.
Some analysts have grown frustrated with what they perceive to be AMR's slow response to changes in the airline industry. Some have suggested that American cut more flights to help drive up prices, but the airline said Wednesday it expects to raise capacity about 1 percent this year, with the increase on international routes. Airlines boost capacity by adding flights or using larger planes with more seats.
AMR recently announced it was considering selling or spinning off American Eagle.
The company's shares rose 2 cents to $6.87 in midday trading. AMR shares rallied in late 2009 and early 2010 but have fallen lately, dropping 35 percent since early March.Source: AP