AA Surprises With Earnings

AMR Corp, the parent of American Airlines, reported smaller-than-expected losses for the first quarter today, an announcement that gave the company's stock a boost. By midday, shares were up about 15 percent for the biggest intra-day gain in six months.

For the quarter, AMR reported that it had a net loss of $375 million, which it attributed to the sharp drop-off in people actually flying. American, like the other major US carriers, cut back on its schedule last year, but the fewer planes in the air are still flying with empty seats. American's traffic dropped 12 percent in the first quarter, though in March traffic was off 10.9 percent.

"While lower fuel prices have provided a significant buffer against falling demand in 2009, the struggling economy and capital markets remain significant challenges for American and the rest of the industry," AMR chief executive Gerard Arpey said in a statement.

Kevin Crissey, a UBS AG analyst in New York, gave AMR a buy rating. "Since first quarter was better than our forecast, perhaps second quarter won't be as bad either," he said in a note to investors, according to Bloomberg.

For a more sober assessment of AMR's spin, here's Joe Sharkey:

You are not looking at "challenges." You are looking at a verdict. The economy is obviously a huge factor, er, I mean "challenge." But you are also looking at a conclusion by a great many Americans that air travel, with the arrogance of the airlines and the indignities of the airport-security ordeals, is no longer worth the hassle, at least not to the extent hat it has been for 25 years.

These desperate fare sales, and the lack of strong public response to them, are the herald of the day of reckoning for the network carriers. You have made people hate you. The good times will not roll again, even when the good times roll again elsewhere.

An industry that is despised by its customers cannot prevail. An era has ended for you.