American Airlines posts record loss DALLAS (Reuters) =97 AMR Corp., the corporate parent of American Airlines,= =20 posted the biggest yearly loss in aviation history Wednesday =97 $3.5= billion=20 in 2002. The world's largest airline reported a fourth-quarter loss of $529= =20 million and warned that it must cuts costs drastically if it wants to keep= =20 flying. AMR shares fell more than 15% in morning trading. Fort Worth,=20 Texas-based AMR said the quarterly loss amounted to $3.39 a share, compared= =20 with a loss of $5.17 a share a year earlier. Analysts, on average, had=20 expected a loss of $3.73 per share, with loss forecasts ranging from $3.30= =20 to $4.06, according to Thomson First Call. AMR is seeking to cut costs=20 wherever it can, with a goal of about $4 billion in permanent reductions.=20 It says it has identified more than $2 billion in cuts so far. The airline= =20 has slashed its capacity and cut its work force since the Sept. 11 attacks= =20 walloped the travel industry. "Clearly, results such as the ones we=20 reported today are unsustainable," said Don Carty, AMR chairman and chief=20 executive officer. Carty said a sluggish economy, high fuel costs and global uncertainties are= =20 items that concern the company and may impact its bottom line. He said AMR= =20 must trim costs significantly, including cutting its payroll, if it is to=20 stay in business. Several major U.S. airlines, including AMR, have hired=20 bankruptcy lawyers in the face of an unprecedented industry downturn,=20 sources familiar with the matter said on Tuesday. The sources said the=20 hiring of various firms does not necessarily mean that the airlines are=20 preparing imminent bankruptcy filings but signals that they are keeping=20 their options open. The airline industry has lost billions of dollars since= =20 the Sept. 11, 2001, attacks on the United States threw the travel industry= =20 into crisis. AMR has retained lawyers Marcia Goldstein and Martin=20 Bienenstock of its long-time legal adviser Weil Gotshal & Manges, the=20 sources said. The law firm partners were not immediately available to= comment. CASH BURN Adding insult to injury, American's cross-town rival Southwest Airlines=20 reported its 30th straight year of profit as AMR was posting its record=20 loss. At a time when its bigger rivals are losing their shirts,=20 Dallas-based Southwest recorded a fourth-quarter profit of $42 million and= =20 a full-year profit of $241 million. Analysts said they are concerned about= =20 whether American can change its business model in order to be competitive=20 with more efficient carriers such as Southwest. "Our largest problem with=20 American remains its heavy cash burn," Gary Chase, an airline analyst at=20 Lehman Brothers, said in a research note. Lehman estimates the carrier is=20 losing about $5.3 million a day under its current operating structure, he=20 said. American said in its earnings statement that it would seek to=20 renegotiate loan covenants related to more than $800 million of debt in=20 order to remain in compliance with the terms of the borrowing beyond June=20 30, 2003. It said it expects to be successful in obtaining a modification=20 or waiver of the covenants on acceptable terms It also said it would record= =20 a pension liability charge at the end of the year of about $1.1 billion. RECORD LOSS For the full year 2002, AMR reported a loss of $2.0 billion before special= =20 items. Including special items, the loss was $3.5 billion, or $22.57 per=20 share. The net loss surpassed the previous record loss of $2.1 billion=20 posted by United Airlines' parent UAL Corp. in 2001. For 2001, AMR reported= =20 a loss of $1.4 billion before special items, and a loss of $1.8 billion, or= =20 $11.43 per share, after special items. The company said revenue rose 10% in= =20 the fourth quarter, to $4.2 billion. It cut its expenses by 1.7%, to $4.9=20 billion. Last week American asked its employees to come to the aid of the=20 carrier, saying there was no time to waste if they wanted to keep the=20 airline in business. Two big unions at the airline are considering a=20 company request to freeze wages, and another union is trying to hammer out= =20 a new contract. American's main rival, United Airlines, is seeking big wage= =20 cuts from its employees as it undergoes restructuring under bankruptcy=20 protection. AMR said it is faced with even more pressure to reduce costs as= =20 United and US Airways Group Inc. have seen their costs reduced in the=20 bankruptcy process through items such as easier terms for paying off debts.= =20 Earlier this month American said it would cut more than 800 flight=20 attendant jobs, or nearly 4% of the total, by the end of January. It said=20 it would lay off 343 attendants and another 492 would go on voluntary=20 leave. AMR shares were off 59 cents at $4.31 in morning trade on the New=20 York Stock Exchange after falling as low as $4.11 earlier. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@escape.ca Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.atlanticlng.com TnT Webdirectory: http://search.co.tt *********************************************************