updated 4/16/2008 1:56:59 PM ET 2008-04-16T17:56:59

High fuel costs offset an increase in revenue and pushed the parent of American Airlines, the nation’s biggest carrier, to a $328 million loss in the first quarter.

The results from AMR Corp., the first major U.S. airline company to report January-March results, could portend a difficult year ahead for the industry.

Fort Worth-based AMR said the loss equaled $1.32 per share, compared to a profit of $81 million, or 30 cents per share in the same period last year.

Analysts surveyed by Thomson Financial expected a loss of $1.34 per share.

Revenue rose 5 percent to $5.7 billion, up from $5.4 billion a year earlier but a bit short of the $5.73 billion forecast by analysts.

Filling seats wasn’t a problem — average occupancy hit a record 79.1 percent in the first quarter, up 1 percentage point from a year earlier. American also said average fares paid rose 5.1 percent.

But spending on fuel jumped 45 percent, wiping out the impact of the revenue gains.

American said last month that it expects to spend $9.3 billion for fuel this year, up from $6.7 billion last year. Fuel has zoomed past labor as AMR’s biggest single cost, accounting for 35 percent of first-quarter spending.

Chief Executive Gerard Arpey called the first-quarter results disappointing. He said, however, that cost-cutting had put the company in better condition to withstand high fuel prices and concerns that a weakening U.S. economy could hurt travel.

American said it is cutting U.S. capacity by 3.6 percent this year to save money, and it’s speeding the replacement of its MD-80 fleet with more fuel-efficient planes.

American grounded its MD-80s twice within the past month, disrupting travel for more than 300,000 passengers, to make the planes comply with federal safety regulations on electrical wiring. But Arpey said the planes were never unsafe and the groundings weren’t a factor in the decision to speed up their replacement.

Analysts believe AMR won’t turn an annual profit again until at least 2011, according to surveys by Thomson.

American’s plight is complicated by the possibility it could be left out as other U.S. airlines get bigger through combinations.

Delta Air Lines Inc. and Northwest Airlines Corp. announced a deal Monday to leapfrog American as the nation’s biggest carrier. And sources said UAL Corp’s United Airlines and Continental Airlines Inc. have discussed a combination that would be even bigger than Delta-Northwest.

If that happens, American “will be left in the weakest position of the network carriers,” said Philip Baggaley, an analyst with Standard & Poor’s. “They’re No. 3 then — a significant No. 3, but not as strong a route network as either one” of the new combinations.

Ray Neidl, an analyst with Calyon Securities, said AMR could still make a bid for Northwest — seeking to upend the Delta-Northwest deal.

If AMR can’t pull that off — and it would be difficult, Neidl said — it could be left picking up spare gates and other assets cast off by the merging airlines. Analysts say smaller carriers, such as US Airways, might beef up American’s domestic network but do little or nothing to improve its international service.

American is also dealing with a near-revolt among its employees, particularly its pilots, who elected a hard-liner president last year and spent part of Tuesday picketing against American outside the headquarters of the airline’s biggest customers and shareholders.

Picketing pilots said they were embarrassed over last week’s flight cancellations and are outraged about stock bonuses totaling up to $40 million going to executives this week. They said the company should spend more on maintenance and personnel, even while it’s losing money.

Cyndi Dawson, a pilot and former flight attendant at American, said the airline has canceled flights and lost the accompanying revenue for lack of a ready crew, yet won’t recall more laid-off pilots. She said the airline must spend money — on employees — to make more.

“If we operated as efficiently as Southwest, we’d probably be doing well,” she said, expressing a common sentiment among American employees about their Dallas-based neighbor, which has remained profitable through the industry downturn.

AMR also said Wednesday it will sell 90 percent of its investment arm, American Beacon Advisors Inc., for about $480 million to two private-equity firms — Lighthouse Holdings Inc., an affiliate of Pharos Capital Group LLC, and TPG Capital, the buyout unit of the former Texas Pacific Group.

AMR said it expects the sale to close this summer.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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