DALLAS American Airlines' parent company, AMR Corp., posted another quarterly loss on Wednesday. It's the carrier's fourth straight quarter in red ink and 14th in the last 16 quarters.

Fuel costs burned $653 million more than during the same quarter last year. But it's the big pensions and payrolls that continue to be the strongest headwind for American, the airline says.

Our labor costs are higher than most of the other airlines we compete with on a daily basis, many of whom reduced their costs by going through bankruptcy, said American Airlines spokesman Tim Smith.

Industry analysts say American is the only major carrier that hasn't filed for bankruptcy, and the only one not posting a profit. That has fueled the speculation about its financial future.

Airline Financial's Bob Herbst said American's situation is eerily similar to what Northwest Airlines reported before it filed for Chapter 11 protection.

I think in the long run, bankruptcy would be very positive for American, Herbst said. Because it will come back as a very strong competitor against Delta and United when the process is over.

On the other hand, industry analyst George Hamlin believes AMR showed signs of life by increasing its revenue by 9 percent, or $6.38 million. He said the only reason the airline is not making a profit is its huge pension payments and lower labor productivity per dollar, compared to other airlines.

If AMR Corp. can sign new labor deals before the end of the year, it could return to profitability.

That remains to be seen, Hamlinsaid. But American has still got a gap between itself and its competitors. So the sooner they're able to do something there, the less need for bankruptcy there would be.

American believes good news is on approach. It's buying new planes to cut fuel and maintenance costs, and it's working on a new deal with pilots.

Management wants to maintain that momentum by avoiding talk of bankruptcy.

We've said as clearly as we can: That is not our intent, Smith said. That is not the direction we want to go in. We want to solve this in other ways.

As for passengers, American Airlines knows it has to cut costs, so it's cutting flights. Expect ticket prices to go up especially for the holidays. says prices are already up 10 percent from last year. Their advice: Book now, because prices will go higher the closer we get to the holidays.

American joined Delta in a price increase this week, raising fares $10 per round trip.


Read or Share this story: