updated 10/18/2006 1:11:51 PM ET 2006-10-18T17:11:51

The parent of American Airlines, the nation’s biggest carrier, reported a slim profit for the third quarter as rising revenue offset higher fuel costs. It was the company’s first back-to-back quarterly profit in six years.

AMR Corp. said Wednesday it earned $15 million, or 6 cents per share, in the quarter ended Sept. 30, compared to a loss of $153 million, or 93 cents per share, a year earlier.

Revenue rose 6.6 percent to $5.85 billion from $5.5 billion a year ago.

The results included a $99 million charge to reduce the value of fuel-hedging contracts. Without that write-down, AMR said it would have earned $114 million, or 45 cents per share.

Analysts expected the company to earn 42 cents per share before one-time items on sales of $5.90 billion, according to a survey by Thomson Financial.

AMR, which also owns the American Eagle regional airline, said it paid $1.77 billion for fuel, $189 million or 11.9 percent more than a year ago, even though fuel prices eased by the end of the quarter. Most other expenses fell. The biggest cost item, labor, rose 1.8 percent.

Fort Worth-based AMR was also helped by strong demand for travel, which has allowed carriers to raise fares. American flights ran 81.7 percent full on average, up from 81.2 percent a year ago.

“These results show continuing improvements in the company’s core business operations, even in the face of new challenges,” said AMR Chairman and Chief Executive Gerard Arpey. “But we also have more hard work ahead of us as we build a company that is better positioned for long-term success.”

American estimated it lost $50 million in revenue after British authorities said they broke up a plot to bomb trans-Atlantic flights.

Ray Neidl, an analyst with Calyon Securities, said he expected a slightly better quarter from AMR, but that when considering the London scare, “They did fairly well.”

Neidl said American will face growing pressure to control costs and sell a better mix of fares — more seats at higher fares; fewer at deep discounts — to boost revenue. Airlines are now in the typically slow fall period, but Neidl said American should be able to raise prices again next spring.

“If the economy remains strong next year and if fuel moderately declines, it could make 2007 a banner year,” he said.

American is the first major U.S. airline to report third-quarter results. Analysts expect the industry to post back-to-back profitable quarters for the first time since 2000.

But even a second straight positive quarter doesn’t herald a turnaround, said Gary Kelly, chief executive of Southwest Airlines Co., the most profitable U.S. carrier.

“The industry is in very sad shape from a financial perspective,” he said Tuesday. He said the downturn in fuel prices could be temporary and that travel demand has softened since summer, especially since news of a foiled plot to bomb jetliners crossing the Atlantic.

“The airline balance sheets are in terrible shape,” Kelly said. “The earnings are nowhere near where they need to be to compensate investors.”

Southwest and Continental Airlines Inc. are scheduled to report their third-quarter results on Thursday.

For the first nine months of the year, AMR earned $214 million, or 91 cents per share, compared to a loss of $257 million, or $1.58 a share, in the same period of 2005. Revenue is up 10.4 percent so far this year, to $17.17 billion.

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