Falling labor costs at AMR ( AMR), parent of American Airlines, allowed the carrier to top Wall Street estimates and offset the rising price of fuel, unlike Northwest Airlines ( NWAC), which missed estimates and reiterated a plan to cut employee wages. American, the world's largest airline, announced a first-quarter net loss of $166 million, or $1.03 a share, a dramatic improvement from the year-ago loss of $1.04 billion, or $6.68 a share. Wall Street expected the carrier to lose $1.04 a share in the first quarter. Revenue came in at $4.5 billion, up 9.5% from last year's $4.1 billion, and better than the $4.4 billion expected by analysts. In reaction, shares rose 57 cents, or 4.7%, to $12.60. "We are never satisfied to be reporting net losses, but we are nonetheless pleased with how far we have come over the past 12 months," said Gerard Arpey, president and CEO. "It is also worth noting that the first quarter is seasonally a difficult quarter -- and that difficulty has been compounded this year by extremely high fuel prices." American spent 10.8% more on fuel than it did a year ago, but the company's total expenses dropped 10.4% thanks to deep wage concessions from employees. All told, the carrier's labor costs dropped 21.8% year over year, with cost per available seat mile, a key metric called CASM, coming in at 9.49 cents, down from 11.39 cents a year ago. "Our success in removing costs from the operation has paved the way for our improved results and has given us the ability to stand and fight, rather than retreat and shrink," said Arpey. Indeed, American has opted to expand capacity in order to fight off low-cost competitors like JetBlue ( JBLU) and Southwest Airlines ( LUV), which have been adding transcontinental routes. In the first quarter, the company said capacity, as measured in available seat miles, rose 5.8%, while traffic, as measured in revenue seat miles, rose 8.8%.