Cheap Airplane Tickets Contribute To American Airline Loss

To combat weak travel demand, American Airlines offered cheap airplane tickets as well as cheap vacation packages, which played a role in its parent company, AMR Corp, posting a fourth quarterly loss. AMR reported a loss of $344 million, which was a slight improvement on the $347 million loss reported a year earlier.

Operating revenue declined 7.4 percent to $5.06 billion, which beat analysts estimates of 5.03 billion.

Overall costs for the airline were steady in part because of lower fuel prices. If you take fuel costs out of the equation, operating costs rose 8.3 percent, largely due to declining seat capacity and increased pension expenses.

Available seat miles fell my almost 5 percent, contributing to its percent of total seats filled rising to 81.1 percent vs. 78.3 percent the prior year.

AMR is projecting seat capacity to increase by 0.9 percent in 2010, with a 0.5 percent decrease in domestic capacity and a 3.2 percent increase internationally. Contributing to this increase will be the reinstatement of flights cancelled due to the H1N1 virus last year and to the commencement of a new Chicago to Beijing service.

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