Ongoing weakness in travel demand resulted in a 21% decline in revenue and a second-quarter loss for American Airlines parent AMR ( AMR), but the carrier beat Wall Street estimates.

Excluding special items, the loss was $319 million or $1.14 a share. Analysts surveyed by Thomson Reuters had estimated $1.28 a share. Revenue was $4.9 billion, in line with estimates. During the same period a year earlier, excluding items, American lost $298 million or $1.19 a share.

Including the impact of approximately $70 million related to aircraft sales and groundings, the second-quarter 2009 loss was $390 million or $1.39 a share.

"With ongoing global economic weakness and the resulting effect on travel demand, revenues are down sharply from a year ago," said CEO Gerard Arpey, in a prepared statement. "The spot price of oil, while much lower than this time last year, has risen since early this year and remains volatile."

American said full-year 2009 capacity will decline by 7.5%, compared with full-year 2008, a reduction of about one percentage point more than previously forecast.

The revenue decline reflected a 7.6% mainline capacity reduction as well as a $50 million to $80 million decline due to the impact of the H1N1 virus. Additionally, cargo revenue fell by 42.6% or $99 million, reflecting global economic weakness. Fee revenue increased by 7.4% to $565 million.

Mainline passenger revenue per available seat mile declined by 16%. Yield fell by 15.4%, reflecting aggressive industrywide pricing and reduced premium traffic.

On the cost side, mainline cost per available seat mile excluding fuel increased by 5%, driven largely by costs related to reduced capacity, pension expense, and investment in dependability initiatives. Fuel costs were $910 million lower than they would have been at prevailing prices a year earlier.

American said it will take delivery of eight additional 737s, bringing total 737 firm orders to 84 during 2009 through 2011, including aircraft already delivered this year. The carrier said that all the orders through 2011 are, subject to certain terms and conditions, covered by committed financing arrangements.

Top 10 Airlines

The carrier ended the quarter with $3.3 billion in cash and short-term investments, down from $5.5 billion a year earlier, which included more than $800 million in collateral from hedge counterparties. As of July 7, American said it had $3.7 billion in unencumbered assets and other sources of liquidity.

In midmorning trading, American shares were up 1.67% to $4.25.

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