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AMR 3Q loss soars
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October 24, 2001: 3:40 p.m. ET
Operator of American and TWA shows sharp revenue drop in wake of attack.
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NEW YORK (CNNmoney) - AMR Corp., the world's largest airline company, posted a record third-quarter loss Wednesday that was much larger than expected due to the steep drop in air travel in the wake of the Sept. 11 terrorist attack.
The operator of both American Airlines and Trans World Airlines lost $525 million, or $3.40 a share, in the quarter, excluding special items. Analysts surveyed by earnings tracker First Call had forecast a loss of $2.67 a share. The company earned $322 million, or $1.96 a share, in the year-earlier quarter.
Shares of AMR (AMR: down $0.30 to $19.65, Research, Estimates) were lower in afternoon trading on a mixed day for airline stocks.
The company had lost money in both the first and second quarters due to a sharp drop in demand for business travel as the economy slowed and was on track for another loss in the third quarter even before the attack. On Sept. 7, it warned that its third-quarter loss would be considerably larger than the 68 cents a share loss in the second quarter. Analysts had expected a loss of only 39 cents a share before that warning.
But in the wake of the attack, AMR said it would cut its flight schedule by nearly 20 percent and lay off about 20,000 employees. It also said all its executives have taken voluntary pay cuts and that CEO Donald Carty and the board of directors would go without pay the remainder of the year.
And in a conference call with analysts, chief financial officer Tom Horton said AMR expects to lose between $10 million and $15 million a day in the fourth quarter, according to a Reuters report.
"That [daily loss figure] is down a bit from where it has been," Horton reportedly said. "During the shutdown it was a scary number. It's down to about $15 million a day."
The company took charges of $397 million related to grounding of aircraft, severance and other direct costs from the Sept. 11 attack, but also recorded a special credit of $508 million in direct government aid during the quarter. Including both those special items, the company posted a net loss of $414 million, or $2.68 a share.
Revenue fell 8.4 percent to $4.8 billion from $5.3 billion a year earlier, despite the addition of TWA, which had revenue of $591 million in the quarter and was not a part of the company in the year-ago period. First Call's forecast had been for revenue to rise to $5.6 billion in the most recent period.
The entire industry was being plagued by losses even before the attack. Among the eight largest airline companies, only Continental Airlines (CAL: down $1.06 to $17.13, Research, Estimates) and Southwest Airlines (LUV: up $0.11 to $16.02, Research, Estimates) were able to turn a profit in the first two quarters, and Southwest, the only major carrier other than AMR to report third-quarter results so far, likely will be the only one to make money this quarter or next.
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The airlines received about half of a $5 billion federal bailout just before the end of the quarter. Since the money is based on the capacity of each carrier in August, AMR received more than any other.
Shares of Dallas-based AMR (AMR: Research, Estimates) were down $1.25 to $19.70 Wednesday afternoon. 
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