AMR Corp , parent of American Airlines, on Wednesday reported a quarterly net loss on weaker travel demand, although -- excluding items -- the company beat expectations and its stock vaulted higher.

AMR, the first major airline to report first-quarter results, blamed economic weakness for its loss. Other airlines due to report soon likely will have suffered similarly in the quarter despite efforts to cut capacity to better meet demand.

While lower fuel prices have provided a significant buffer against falling demand in 2009, the struggling economy and capital markets remain significant challenges for American and the rest of the industry, AMR Chief Executive Gerard Arpey said in a statement.

The airline industry has been battered this year by falling demand as the economic recession takes its toll on travel budgets. The industry downsized last year and continues to shrink capacity in 2009 to offset weakness.

AMR cut its mainline capacity -- the number of seats on flights owned and operated by AMR -- 8 percent compared with the year-ago period. But its load factor, which measures how full a plane is, fell to 75.7 percent from 79.1 percent.

Overall, the results offer positive signs mixed with the negatives for the industry, said Morningstar analyst Basili Alukos.

I'm still expecting passenger volumes and revenues to be down pretty significantly for all carriers across the board, with the exception maybe of Southwest (Airlines ), he said.

But capacity is still coming offstream, which is a good thing for the industry, he said.

RESULTS

AMR said its first-quarter net loss was $375 million, or $1.35 per share, compared with $341 million, or $1.37 per share, a year ago.

Excluding items, the company lost $1.30 a share, easily beating analyst forecasts for a $1.62-per-share loss, according to Reuters Estimates. AMR shares shot up more than 18 percent, or 77 cents, to $4.99 on the New York Stock Exchange.

The results include the impact of a $13 million charge, or 5 cents per share, reflecting the value of future lease payments related to aircraft retirements in the quarter.

AMR said its operating revenue fell 15.1 percent to $4.84 billion in the quarter.

The company said it paid 30 percent less for fuel in the quarter and sees another decline in the second quarter.

Excluding fuel, AMR's mainline costs per available seat mile, excluding fuel, increased 6.8 percent in the quarter. The company predicted those costs will be up 6.6 percent in 2009 vs 2008.

AMR expects to cut its mainline capacity 6.5 percent year-over-year in 2009, with the bulk of that reduction on domestic routes. In the second quarter, AMR expects mainline capacity to be down 7.5 percent.

AMR ended the first quarter with $3.3 billion in cash and short-term investments.

(Reporting by Kyle Peterson, editing by Maureen Bavdek and Gunna Dickson)

American Airlines