On Monday AMR, parent of American Airlines, said it expected its unit revenue to increase between 6.9 percent and 7.9 percent year-over-year in the first quarter.
The company, which saw its mainline unit revenue up 4.5 percent in the first quarter of 2007, said in a regulatory filing that it has hedged about 35 percent of its expected fuel consumption for the first quarter and 29 percent for 2008. AMR's outlook "suggests a slightly narrower loss than originally anticipated," said Jamie Baker, airline analyst at JP Morgan, in a research note.The airline industry has been dealing with skyrocketing jet fuel prices as the cost of a barrel of oil lingers near record highs above $100. AMR predicted that the price of a gallon of jet fuel would average $2.73 for the first quarter and $2.98 in 2008. AMR said it expects its consolidated cost per available seat mile to be 13.36 cents in the quarter and 13.57 cents in 2008. The company said it expects to end the first quarter with cash and short-term investments amounting to $4.8 billion, of which about $430 million is restricted.
Airlines have attempted to offset their high costs with reductions in capacity, the number of seats for sale, that make operations more efficient and enable carriers to raise fares. AMR said it would issue a new capacity outlook in April.
