Part Of Cost-Savings Measures Announced In First Quarter Report

American Airlines reported a net loss of $463 million in the first quarter of 2011, driven in large part, the airline said, by rising fuel prices. In a news release, the company reported achieving improved year-over-year results in spite of sharply rising fuel prices that increased 24 percent compared to the first quarter 2010. Including the impact of fuel hedging, AMR paid on average $2.76 per gallon for jet fuel in the first quarter of this year versus $2.23 per gallon in the first quarter 2010. As a result, the Company paid $351 million more for fuel in the first three months of 2011 than it would have paid at prevailing prices from the corresponding prior-year period.

As part of its cost-savings measures, the airline said Wednesday that it plans to reduce its fourth quarter 2011 system capacity by an incremental 1 percent. This cut is in addition to the capacity reduction already announced by American in March and further demonstrates the flexibility provided by its MD-80 fleet. American now intends to retire at least 25 MD-80s in 2011, as part of the company's plan to continue renewing its fleet, while addressing the current fuel environment.

The airline also reports that it now has five 777-300ERs that are scheduled for delivery in 2012 and 2013, including two additional aircraft for which options were recently exercised. These 777-300ERs will complement American's fleet, offering additional network flexibility in the future, and providing increased efficiency due to better seat mile economics and performance characteristics.

"High fuel prices remain one of the biggest challenges to our industry and our company. We believe our steps to aggressively increase revenues, reduce capacity, control non-fuel operating costs, and bolster liquidity will help us to better manage the challenges we currently face," said AMR Chairman and CEO Gerard Arpey. "While we clearly must achieve better results as we continue to strengthen our business, we have made some meaningful progress. I want to thank our people for their commitment to serving our customers, and I am confident that our overall strategy positions American well to address our current challenges and sets the stage for long-term success."

FMI: www.aa.com