Dahlman Rose Reports Fare Increases Will Not Be Enough For AMR Corporation

In a report published by Dahlman Rose, AMR Corporation (NYSE: AMR) updated 1Q11 and 2011 investor guidance.

Dahlman Rose said that jet fuel continues to pressure AMR's already razor thin margins, significantly impacting 2011 EPS outlook. “We acknowledge the pricing environment is improving, but not enough to offset industry high labor costs and the rising cost of jet fuel. This morning AMR Corp updated guidance for 1Q11 and full year 2011. Management expects consolidated capacity to grow by 3.5% in 1Q11, with mainline up by 2.7% and regional up by 1.2%. For the full year, management expects consolidated capacity growth of 3.2%, with mainline up by 2.6% and regional up by 0.8%. Jet fuel for 1Q11 is expected to average $2.72/ gallon and for 2011 is expected to average $3.01/gallon, a significant increase from prior guidance (in the $2.60 range). The rising cost of jet fuel is being partially offset by improved unit revenue growth. For 1Q11 management expects unit revenue growth of 4.1%-4.6%, which is the low end of the industry's range.”

AMR Corporation closed yesterday at $6.78.