American Airlines' Costly Glitch
With fare wars already pushing it into the red, the last thing American Airlines needed was to be blindsided by a computer foul-up. But on July 15, parent AMR announced a $109 million aftertax charge against second-quarter earnings to cover the suspension of an ambitious airline, hotel, and car-reservation system called Confirm.
The system was supposed to come on-line on June 30, but AMR recently announced that software glitches would delay it for 18 more months. That led partners Hilton, Marriott, and Budget Rent-A-Car to quit the project. The charge for Confirm accounted for the bulk of AMR's $166 million quarterly loss. AMR Chairman Robert Crandall called the quarter "an enormous disappointment."