American Airlines $344 Million 4Q Loss; U.S. Airline Passenger Revenue Plummeted in 2009

American Airlines today reported a $344 million loss in the fourth quarter of 2009, and the numbers behind that look bad for an industry that continues to struggle.

Meanwhile, the Air Transport Association said today that passenger revenue for U.S. airlines plunged 18 percent in 2009, a record. Overall, passenger traffic fell 3 percent from 2008.

Of American Airlines' $344 million third-quarter loss, writing-down the dropping value of smaller regional jets (which gobble fuel) accounted for $42 million. Parking other aircraft in the desert accounted for $23 million.

Overall mainline seating capacity was off 4.9 percent, reflecting the continuing shrinking of air-travel service among U.S. carriers.

The load factor for the quarter was a record 81.1 percent, meaning more people were crammed into fewer planes.

Yield, or the amount of dough the company took in from passengers, was off 7.6 percent, despite the mounting windfall-revenue that domestic carriers are seeing from those baggage and cancellation fees.

American blamed the yield decline on "more aggressive pricing industrywide" (that's a flack's way of describing fare discounting and promotions to lure passengers) and "reduced traffic in the premium cabins."

That refers to what is one of the key developments in the industry's fortunes, the plunge in the number of business travelers who are buying business-class and first-class seats. Along with that, though not reflected in the basic passenger-traffic numbers, is the sharp reduction throughout the global industry in premium fares. Those $9,500 round-trip fares between New York and London are pretty much history now.

The International Air Transport Association reported on Monday that worldwide premium traffic continued to decline in November, the last month for which data are available.

The number of passengers traveling on first or business-class fares fell 6.7 percent over the already depressed numbers of November 2008, the trade group said. That's just passenger numbers. Reflecting fare reductions and sales, revenue in the premium market (which typically accounts for about a third of passenger revenues industrywide) was off 30 percent in the first half of 2009, IATA said.

As I have said before, this trend cannot continue indefinitely. Something's gotta give.

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