April 20, 2012- American Airlines’ parent company AMR Corp, which entered bankruptcy protection in 2011, has announced losses of $1.7 billion when its quarterly earnings were released on Thursday. The aviation company has been hit hard by rising costs in fuel and bankruptcy reorganization costs.
The most recent loss was four times the loss the company sustained last year in the same quarter. At that time, the company reported a loss of $405 million. AMR Corp said reorganization costs of $1.4 billion created part of the quarterly loss. The company announced those costs were related to its November 29 filing for bankruptcy protection.
The largest part of the those costs, close to $1 billion, are for the rejection of eight aircraft engine leases and eight aircraft leases plus the modification of over 158 other leases for aircraft.
The rising cost of fuel also hit American hard. The company paid an average of $3.24 for each gallon of jet fuel during the first quarter of this year. That was an increase of 17% over the price of $2.76 from last year’s first quarter. That amounted to $325 million more in costs in the first quarter compared to last year.
Even though layoffs were not mentioned in the recent quarterly reports, the airline said last February it was cutting over 13,000 jobs and when layoffs are done en masse, they tend to cost a company a great deal of money due to severance pay.