The Motley Fool Previous Page

An Airline Stock to Avoid

Robert Eberhard
October 20, 2011

We can't say it wasn't unexpected. AMR (NYSE: AMR  ) , parent of American Airlines and American Eagle, posted a quarterly loss for the fourth consecutive time, and 14 of the last 16 quarters, causing its share price to plunge over the past few days.

While revenues were up to this quarter because of higher fares, the Texas-based operator posted a net loss of $162 million, or $0.48 a share. Analysts were expecting a loss of $0.43 a share. This is also down from a year-ago profit of $143 million, or $0.39 a share.

It cost a lot to run a major airline into the ground
High operating costs, primarily in the form of jet-fuel prices that were up 41% from the same period last year, drove the loss despite rising revenues. Beyond jet fuel, the company continues to negotiate with employees in an attempt to save money going forward. It has been in negotiation the three unions representing its workers for more than four years. If American Airlines had the same labor costs as some of its competitors, the savings would be substantial:


Savings (Millions)


United Continental (NYSE: UAL  ) $441 (7%)
Delta Air Lines (NYSE: DAL