Record fuel costs pushed American Airlines parent AMR Corporation into a net loss of $1.4 billion in the second quarter of the year.



This compares to a net profit of $317 million for the second quarter of 2007.

Rising jet fuel prices “contributed significantly” to the company's loss.



AMR paid $3.19 per gallon for jet fuel in the second quarter compared to $2.09 a gallon in the same period last year, a 53% increase.



As a result, the company paid $838 million more for fuel in the second quarter of this year than it would have paid at prevailing prices a year earlier.

AMR is to retire all 34 of its Airbus A300s by the end of 2009, three years earlier than originally planned �" which will result in unspecified capacity reductions in next year.



This year it will retire 30 MD-80s, 10 A300s and 26 Saab turbo-props and will retire or remove from service 37 regional jets.



A plan to offload regional arm American Eagle has been put on hold “given the current industry environment”.



Chairman and CEO Gerard Arpey said: "Our company continues to be severely challenged by the fuel crisis that has afflicted our entire industry, and we expect these difficulties to continue for the foreseeable future.



"Clearly, our second quarter results were disappointing, but I am also pleased with our efforts as a company to take difficult yet necessary steps to manage through this uncertainty.



“While we believe the airline industry cannot continue, in its current form, at today's record fuel prices, we also believe our decisions and hard work by employees in recent years have better prepared us to face these challenges.



“We remain committed to taking action - whether that relates to capacity reductions, revenue enhancements, fleet changes or other efforts to improve our financial foundation - as we work to secure our long-term future."

by Phil Davies