Cutthroat Fares Cut Into American
Just when it seemed that airline industry news couldn't get any worse, AMR, parent of American Airlines, announced on Aug. 19 that the carrier's third-quarter losses will top the $48 million it lost before special charges in the second quarter. Some analysts had expected AMR to report slim profits in what is normally the industry's peak season.
But thanks to the airlines' fare war this summer, the industry's operating loss for the third quarter could approach $500 million, says analyst Samuel Buttrick of Kidder Peabody. While American's low prices have resulted in traffic records for the Dallas-based airline, the fares aren't covering rising costs. In the third quarter of 1991, American earned $70.3 million, or $1.02 a share.