AMR, Continental Airlines Report Sharp Losses

AMR Corp., parent of American Airlines, and Continental Airlines Inc. posted steep quarterly losses Wednesday as record fuel prices outweighed efforts to cut costs and raise fares.

Analysts have estimated that airlines, squeezed by oil costs, as well as a surplus of seats that has largely prevented fare increases, will post losses totaling about $2 billion for the first quarter.

Still, Fort Worth-based AMR beat Wall Street forecasts, posting a narrower first-quarter loss of $162 million, or $1 a share, compared with $166 million, or $1.03, in the year-earlier period. Revenue rose 5.3% to $4.8 billion.

Without a $69-million one-off tax credit, AMR would have reported a loss of $230 million, or $1.43 a share, still beating Wall Street’s forecast of a $1.61 loss, according to Reuters Estimates.

Houston-based Continental said its first-quarter loss widened to $184 million, or $2.77, from $124 million, or $1.90, a year earlier. That beat a forecast loss of $2.85. Its revenue rose 8.6% to $2.5 billion.

“The common lesson is that these airlines should not expect fuel to come down or yields to come up, so the name of the game is, and will continue to be, low operating costs,” said Chris Lozier, an analyst at Morningstar Inc.

Airlines have been aggressively restructuring to offset higher fuel prices, but their moves have fallen short. Both airlines have moved to squeeze more seats onto some aircraft and cut domestic capacity.

“We are starting to see those changes bear fruit in our revenue performance,” AMR Chief Executive Gerard Arpey said in a statement. “Regrettably, that silver lining does not come close to offsetting the impact of oil at $50-plus a barrel.”