Two Analysts Expect Full Year Profit for AMR in 2004
AMR is projected to earn a small profit in 2004, a growing number of financial analysts say.
The sentiment isn't unanimous, but it got a boost last week when analyst Samuel Buttrick of Warburg estimated that AMR would earn 50 cents a share next year.
Mr. Buttrick also said that AMR would lose less in the third quarter, which ends Sept. 30, than he originally thought. His new estimate is a loss of 40 cents a share, down from his previous projection of a loss of $1.60 a share.
The average loss estimate of 11 analysts is $1.22 a share, making Mr. Buttrick's revised number the most aggressive.
AMR's results "will be much closer to break-even than current estimates suggest," he wrote in a note to investors. AMR won't do that well, but its performance could surprise people, Mr. Buttrick said.
Ray Neidl of Blaylock & Partners in New York also projects AMR will be in the black by the end of next year. He estimated earlier this month that the company would earn 52 cents per share in 2004.
"At this point, it's going to get better from here for them," Mr. Neidl said Friday. Wall Street is underestimating the benefits AMR will see from its $4 billion-a-year cost-cutting campaign, he said.
"I've been very conservative in my revenue estimates for them, but if the economy continues to perform well, they'll do better," he said. Mr. Neidl is not as optimistic about AMR's third-quarter performance. He estimates it will lose $1.10 per share, or about $172 million.
He's worried about AMR's revenue repercussions from this month's blackout in the Northeast and upper Midwest. But, he said, if the revenue numbers for August are as strong as they were in July - when they were up about 10 percent over 2002 - then his loss estimate probably will shrink.
"The real question for American is what is going to happen after Labor Day," Mr. Neidl said. "Several of the carriers have given us indications that business travel traffic is starting to come back."
