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Personal Finance > Saving & Spending > Travel
Emptier planes this summer
May 23, 2001: 3:48 p.m. ET

Owner of American and TWA sees fewer passengers, higher costs through July
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NEW YORK (CNNfn) - AMR Corp., the world's largest airline holding company, sees a decline in summer air travel and an increase in costs, according to a government filing.

The filing says that with the Securities and Exchange commission by the company that operates American Airlines, the nation's No. 2 carrier, as well as recently acquired Trans World Airlines, said that it expects to see traffic fall this month as well as June and July, when the normally-busy summer travel season gets under way.

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Shares of AMR (AMR: down $0.83 to $38.55, Research, Estimates) lost ground Wednesday as most major airline stocks declined.

AMR Corp. sees a 4.2 percent decline in traffic on American in May compared to year-ago levels, a 1.3 percent decline in June, and a 1.0 percent decrease in July.

The airline sees an even steeper drop in traffic at TWA, which it continues to operate as a separate airline as it prepares to integrate it into American. Overall the number of miles flown by paying passengers on TWA is expected to fall 16.5 percent during in the May through July period.

American's expenses are also expected to rise 5.7 percent-to-5.8 percent over year-ago costs during the three months when controlled for the capacity, which is also expected to increase between 2.1 percent and 4.0 percent during the three months period.

Analysts surveyed by earnings tracker First Call were already looking for earnings per share in the second quarter, which ends in June, to fall to $1.02 from $1.75 it earned a year earlier, and for third quarter EPS to drop to $1.59 from $1.96.

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Donald Carty, AMR's CEO, told shareholders last week that he didn't forecast an increase in traffic from the current levels, but did not give any details.

American and TWA followed America West Airlines (AWA: down $0.02 to $10.47, Research, Estimates) in trying to raise fares 5 percent last week, but it dropped that increase Monday when Northwest Airlines (NWAC: down $0.40 to $26.07, Research, Estimates), the nation's No. 4 carrier, declined to join the other major airlines in the attempted increase. graphic

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