AMR's Quarterly Loss Narrows

Overall, AMR's revenue from all sources -- passenger, cargo and other categories -- grew in the first quarter by $594 million, or 12.5%, year over year to $5.3 billion. Expenses rose 10.6% to $5.2 billion, including a 34.3% increase in fuel costs, which reached $1.5 billion.

Shares of AMR gained 92 cents, or 3.9%, to $24.74.

American's passenger revenue per available seat mile was 9.93 cents, up 10.8% to its highest level in nearly six years, driven by higher loads and yields. American's load factor for the quarter was 77.2%, up 1.8 points, after rising in each month of the first quarter.

Yield, representing average fares, advanced 8.2%, marking a fourth consecutive quarter of increases. Revenue passenger miles rose 2.1%, despite a 0.2% decline in available seat miles.

JPMorgan analyst Jamie Baker called AMR's results "respectable," and said the company benefited from cargo revenue, "which at $186 million represents a first-quarter record and AMR's third-highest quarterly performance in its history." During the past 12 months, JPMorgan has provided AMR with investment-banking services.

Operating expenses per available seat mile, excluding regional affiliates, was 10.81 cents, up 10.3%. Those expenses excluding both regional affiliates and fuel costs were 7.69 cents, a 2.9% increase from a year earlier.

The company said its average fuel cost per gallon was 45% higher than last year at $1.90. Arpey said fuel costs have risen by 143% since 2000, adding $3.6 billion to American's annual cost structure.

"If you look at the past four years, this industry has given away billions of dollars worth of airline travel," Arpey said. "That can't go on. Ultimately, the consumer has to pay for this. The industry is going to turn around and pass this cost on to its consumers. Otherwise, there won't be an industry."

AMR also said that it successfully renegotiated its agreement with Worldspan, a global distribution system that enables an airline to display its products over an extensive network of travel agencies, at the end of March. The new arrangement provides substantially lower costs and greater flexibility, Arpey said. American is in discussions with some of the other global distribution systems, as well.

AMR ended the quarter with $4.8 billion in cash and short-term investments, including a restricted balance of $510 million. As of April 14, AMR had contributed $120 million to its various defined-benefit plans this year.