NEW YORK (AFP) - AMR Corp., parent of world number one American Airlines, reported a quarterly loss and warned of worse ahead as it tackled searing fuel prices and intense competition.
The group suffered a loss of 214 million dollars in the three months to September 30, after squeezing out a year-earlier a net profit of one million dollars.
Losses were equal to 1.33 dollars a share, after zero profit or loss per share a year ago, it said.
Total sales rose 3.4 percent to 4.76 billion dollars.
"Our business was buffeted by three dramatic and harmful developments during the third quarter," AMR chairman and chief executive Gerard Arpey said in a statement.
"The first was record high fuel prices. The second was a weak revenue environment which meant that despite our best efforts -- and unlike other fuel-intensive businesses -- we have been largely unable to pass the higher fuel costs on to our customers. The third development was the unprecedented series of hurricanes, which depressed revenue, increased costs and repeatedly disrupted an important part of our network."
Fuel prices climbed more than 40 cents a gallon from last year, resulting in a 342 million dollar rise in costs.
Meanwhile, revenue per available seat mile declined 2.5 percent and revenue per mile actually flown by passengers slumped 4.8 percent.
"Weak yields are an industry-wide phenomenon," Arpey said.
"Although many industries are getting hammered by high fuel prices, the airline industry has largely been unable to price its product in a way that reflects the higher cost of production. Low cost carrier growth is partly responsible for the depressed fare environment, but there are other factors at work too.
Arpey fretted about growing capacity in the business, with available domestic seat miles up more than six percent this year even as the economy had grown by about 3.5 percent.
"Making matters worse has been the competitive behavior of some carriers either in or on the verge of bankruptcy."
The AMR boss said he believed the airline's cost structure was still too high in the light of extraordinarily high oil costs and that there was a lot to do to boost revenue and cut expenses.
"That said, AMR anticipates the record high fuel prices to continue in the fourth quarter -- a quarter that is typically seasonally weak from a revenue perspective. Thus, AMR expects to incur a fourth quarter loss significantly larger than that recorded in the third quarter," the airline said.
American said it would squeeze passengers in tighter to make more money, adding in a portion of the coach seats previously removed from the MD80 and Boeing 737, 767 and 777 fleets.
Several years ago, American heavily advertised its decision to provide more room to economy passengers.
"When we launched "More Room Throughout Coach," healthy yields and robust business travel were the norm, and both conditions were essential to the success of More Room," Arpey said.
"However, times have changed, and we must acknowledge that in today's low-fare environment, having fewer seats on our aircraft has put us at a real revenue disadvantage compared to other airlines."