DALLAS, Jan. 23 (UPI) -- American Airlines' parent, AMR Corp., reported losses of $3.5 billion in 2002 as it struggles with weak demand for business travel, cut-rate fares and competition from low-cost carriers.
The carrier projects another big loss for the current quarter, the Miami Herald says, adding that American is "burning through $5 million a day."
AMR lost $529 million, or $3.39 per share, in the fourth quarter vs. a loss of $798 million, or $5.17 per share, a year earlier. For the full year, it lost $3.5 billion, or $22.57 per share vs. a loss of $1.8 billion, or $11.43 per share.
Chief Executive Don Carty said that the results were "unsustainable" and the chief financial officer, Jeff Campbell, called them "dismal."
Campbell said weak demand in business travel and Latin America created a drag on revenue, while attempts to raise fares in 2002 failed, the paper notes. Discount carriers compete on 82 percent of American's routes vs. 75 percent a year ago.
Sources told the newspaper that the carrier had hired New York bankruptcy attorneys -- something Campbell wouldn't specifically comment on.
Meanwhile, the Seattle Times reports Thursday that American will take delivery of 11 Boeing jets this year that it doesn't need and can't afford, "even as it searches for $4 billion of cost cuts to stave off bankruptcy."
The paper says that Campbell was "unusually frank" in saying that the carrier had done all it could to persuade Boeing to allow it to delay delivery.
Campbell told reporters and analysts in Wednesday's earnings conference call: "I'll make no bones about it ... we don't really want or need these 11 planes. But we have a contract (with Boeing) so we are going to take the airplanes."
Boeing has worked with carriers to reschedule deliveries, the paper says, and Boeing Commercial Airplanes chief Alan Mulally said last month the company had rescheduled 500 deliveries since Sept. 11, 2001.
"Late last year, Boeing agreed with American to postpone deliveries of 34 planes due in 2003, 2004 and 2005, including eight" for this year, said the Times. "But Boeing's refusal to let American slide its 11 remaining 2003 deliveries, despite the carrier's highly unstable financial condition, shows how critical every sale is to the aerospace giant."
This year's deliveries are for nine 767s and two 777s. According to the Times, the jets are worth about $1.4 billion at list prices, but big customers like American usually get substantial discounts.
One source told the paper that Boeing's financing unit would provide American with nearly $600 million in financing, which is "probably well below the total purchase price of the planes because American has likely made down payments and progress payments as the planes have moved through production."
The sale will help the aerospace company hit a "closely-watched" target of 275 to 285 deliveries this year, contribute about $1 billion to Boeing's revenues, and account for about one year's worth of production on Boeing's 767 production line in Everett, Wash., the Times says.
