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Stocks Drop on Oil Prices, Likely Quarterly Losses

Posted on: Wednesday, 18 January 2006, 09:00 CST

By Trebor Banstetter, Fort Worth Star-Telegram, Texas

Jan. 18--Airline stocks plunged Tuesday as investors eyed rising oil prices and braced for another round of quarterly loss reports this week.

Shares of Fort Worth-based AMR Corp. (ticker: AMR), the parent company of American Airlines, dropped $1.46, or 7.2 percent, to finish at $18.86. AMR shares have fallen more than 15 percent since the beginning of the year.

Dallas-based Southwest Airlines (LUV) fell 50 cents to close at $15.87, a 3 percent decline.

The drop comes as AMR, the world's largest airline, and Southwest, the nation's largest discount carrier, are both scheduled to report fourth-quarter earnings today. Those reports come amid concern over oil prices, which topped $66 per barrel Tuesday.

Despite the skittishness on Wall Street, analysts aren't expecting any bombshells from either airline.

"The fourth-quarter earning season is expected to contain few, if any, surprises," JP Morgan Securities analyst Jamie Baker said in a recent report.

Houston-based Continental Airlines kicked off the earnings season Tuesday with a $43 million loss for the quarter, including a one-time gain of $106 million and special charges of $21 million. Excluding the special items, the airline would have had a $128 million loss for the quarter.

"We continue to face significant challenges," said Larry Kellner, the airline's chairman and chief executive, in a statement.

Airline analysts forecast that AMR will report a loss of $300 million to $600 million, with an average estimate of about $400 million. For the year, analysts expect AMR to lose about $670 million.

Southwest is expected to post a profit of about $95 million for the quarter, and a profit of about $490 million for 2005.

Trebor Banstetter, (817) 390-7064 tbanstetter@star-telegram.com

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Copyright (c) 2006, Fort Worth Star-Telegram, Texas

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NYSE:AMR, NYSE:LUV, NYSE:CAL,

Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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