AMR's reserves fall by $1 billion

American, Continental report passenger traffic fell sharply last month

10/02/2001

By TERRY MAXON / The Dallas Morning News

AMR Corp., parent of American Airlines Inc. and TWA Airlines LLC, saw its cash reserves dwindle by $1 billion in September as it suffered the aftereffects of Sept. 11's terrorist attacks.

American and Continental Airlines Inc. also reported Monday just how sharp the falloff in passenger traffic has been since the attacks. For the full month, American said its load factors declined 10.2 points, to 59.6 percent, and Continental saw its loads fall 11 points to 61.4 percent.

"We lost 1 billion dollars in the month of September alone, and the $900 million we received from the federal government does not cover these losses," American said in a message to employees. "Additionally, we continue to lose tens of millions of dollars a day."

Between Sept. 1 and Sept. 10, American's load factors – or percentage of seats filled by paying passengers – averaged 67.7 percent. That was down 1.8 percentage points from the same 10 days of September 2000.

But between Sept. 11 and Sept. 30, the load factors fell to 53.2 percent, down 16.7 points from Sept. 11-30, 2000, American spokesman John Hotard said.

Continental said its airplanes were 62.2 percent full from Sept. 11 to Sept. 16 when it operated only 32 percent of the flights it had flown before Sept. 11.

As Continental added more flights, the loads fell to 50.4 percent Sept. 17-23 and climbed back to 54.1 percent Sept. 24-30, with U.S. flights fuller than international flights in the last week.

Continental estimated that its unit revenue – revenue received per seat per mile – declined 25 percent to 29 percent for the month. From Sept. 11 onward, the decline was in the 33- to 37-percent range, the Houston carrier said.

The drain on AMR's cash position indicates a large quarterly loss for the Fort Worth company. AMR spokesman Al Becker said the company isn't predicting the size of its net loss, but said the company continues to burn cash.

AMR ended the second quarter June 30 with $1.75 billion in cash.

Brian Harris, airline analyst for Salomon Smith Barney Inc., estimated last week that AMR would end the third quarter with about $2.27 billion in cash, including the federal aid. He predicted it would deplete its cash reserves an additional $1.17 billion in the fourth quarter, which began Monday.

Mr. Harris increased his estimates for AMR's loss to $2.25 per share, or nearly $350 million.

Delta Air Lines Inc. spokeswoman Peggy Estes said Delta flights had an average load factor of 52 percent on Friday, 50 percent on Saturday, and 62 percent on Sunday. Those numbers are better than the previous weekend when Delta had a Friday load factor of 49 percent, 42 percent on Saturday, and 51 percent on Sunday.

In other fallout from the Sept. 11 attacks, Sun Country Airlines Inc. said it would cut its schedule by 26 percent and cut about 250 of its 1,300 jobs. The carrier is based in the Minneapolis-St. Paul area.

America West Airlines Inc. said that chairman and chief executive W. Douglas Parker would forgo any compensation for the rest of the year, and four executive vice presidents would take a 25 percent pay cut.