How does American Airlines go from a $1M profit to a $214M loss in 1 year?

[SoCalDem]

http://biz.yahoo.com/prnews/041020/daw026_1.html

This thing baffles me..

The airlines all got the "Big Bailout" in 2002, and a waiver of any legal liability.. That was supposed to set them on the path of prosperity..

* loves to crow about the BOOMING ecomony, and how FABULOUS things are..

How does one of the 3 major airlines achieve such a STUPENDOUS LOSS? in only one year??

They must be using the Bush-economics model..

* and his pals have spent the last year telling us how woonderful things are, and yet...apparently they are NOT..

Am I the only one who sees the Bullshit piling up in the corner???..:)

[BlueCollar]

1. fuel costs

Some airlines have "hedged" their fuel costs. SWA buys its fuel at approx USD 25 BBL...AA pays much more than that.

Ticket prices are not high enough to offset operating costs

[onenote]

2. paid too much for the pretzels? n/t

[kcwayne]

3. I have noticed a large increase in airline traffic

when I have been flying over the last year. The last flight I took the parking lot at the Indianapolis airport was absolutely full. I have never seen the lot that full in the 20 years I have used the airport.

Clearly the all time high in oil costs has to have a negative impact on the airlines. But mismanagement is also a huge issue.

Every time I check American Airlines for a flight, they are not competitive on price. American's cost structure is ill suited to compete with Southwest Airlines, or ATA, the airlines I typically fly.

Airlines are caught in an economic and demographic squeeze. As personal income and business profit margins are stripped away from the market population, the only way to attract people to fly is to decrease prices. In the face of huge increases in energy, health insurance, liability insurance, and other costs, the airlines business proposition becomes untenable.

Demand for the service is definitely there. The ability to pay for it is disappearing.

[izzie]

4. Bush has taken it over and is now running Co. from air force one.

[NewJeffCT]

5. many possible explanations

Not just the "boom" economy (sarcasm off), but a lot of other reasons:

A) maybe AA was taking a charge to their earnings for severance related to mass layoffs? (oops that flies in the face of the Booming Bush Economy)
B) possibly another charge related to changes in accounting - many companies a few years ago had huge writedowns due to a change in accounting for goodwill. I'm not an expert on airline industry accounting, but it could have been something similar.
C) as somebody stated above - they planned poorly on fuel costs. Maybe they believed Bush when the WH stated that the Iraq invasion would lower fuel costs, so they planned on the opposite of Southwest.

[Alpharetta]

6. Investment maxim: dump any company associated with the Bushes

On Sept. 11 2001, I believe Marvin Bush (Dubya's lesser-known brother) was a security consultant for American Airlines.

[Rockholm]

7. Bill Clinton?

Seems like EVERYTHING else is blamed on him. Geez.