updated 12/27/2006 2:55:31 PM ET 2006-12-27T19:55:31

Analysts who expected the parent of American Airlines to break even or earn money in the fourth quarter now forecast a loss for the period, following the nation’s largest carrier’s disclosure last week that costs are rising and revenue isn’t growing as fast as Wall Street had hoped.

AMR Corp. said after the close of stock markets Friday that its costs were rising due to factors including higher maintenance expenses and weather-related flight cancellations in November and December.

The update, in a filing with the Securities and Exchange Commission, indicated that costs as a ratio of capacity would be higher than many analysts had expected.

Jamie Baker, an analyst for J.P. Morgan, said in a note Tuesday that AMR’s filing prompted him to change from a break-even forecast to a fourth-quarter loss of 40 cents per share.

Before the SEC filing Friday, analysts had expected AMR to earn 50 cents per share in the fourth quarter, according to a survey by Thomson Financial.

AMR said Friday that revenue per passenger miles flown, including the American Eagle regional carrier, would rise 3.6 percent to 4.6 percent in the fourth quarter from a year earlier. Baker had expected a 5.6 percent boost.

Pointing to American’s flight cancellations, Baker said last week’s Denver blizzard might also push UAL Corp.’s United Airlines to a fourth-quarter loss. United has a major hub operation in Denver, where the airport was closed for two days.

Baker still expects AMR to post a profit for all of 2006, but lowered his prediction to 96 cents per share instead of his earlier $1.27 per share. The Wall Street average was $1.77 per share.

William J. Greene, an analyst for Morgan Stanley, also switched his view on AMR on Tuesday, going from one of the most bullish on Wall Street — his prior prediction was a fourth-quarter gain of 71 cents per share — to forecasting a loss of 5 cents per share.

The analyst also cut his forecast for full-year profit more than one-third, to $1.18 per share.

Greene said in a note that he was “clearly just too optimistic” about American’s revenue. He said 2007 was “still looking solid,” but he trimmed his profit predictions for 2007 and 2008 because of rising costs.

Carriers have tried to offset rising costs by boosting fares steadily over the past two years. Over the weekend, the major network carriers were trying to push through another increase of $5 each way on many U.S. flights. American had sought increases of up to $20 one-way, citing higher fuel costs.

American officials did not immediately respond to phone calls for comment Tuesday.

Strong demand for travel has helped lift AMR this spring and summer to its first back-to-back profitable quarters in six years. The company’s shares gained 36 percent this year, through Friday.

But high fuel costs have dampened enthusiasm about the rally. AMR Chief Executive Gerard Arpey has said the industry is still far from turning the corner after losing about $50 billion since the beginning of 2001.

In the SEC filing on Friday, Fort Worth-based AMR said it hedged about 33 percent of its fourth-quarter fuel purchases at an average cost of $68 per barrel of oil. That, however, is less insulation than some other carriers enjoy, notably Southwest Airlines Co. AMR said it expected to pay $1.91 per gallon for the 778.9 million gallons it expected to use during the quarter.

Shares of AMR fell in morning trading but falling oil prices aided a recovery. The stock rose 62 cents, or 2 percent, to $30.87 Tuesday afternoon on the New York Stock Exchange.

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