DALLAS (Bloomberg) — American Airlines parent AMR Corp. said first-quarter costs exceeded its forecast after bad weather forced the world’s largest carrier to cancel 2.5 percent of its flights.The cost to fly a seat one mile excluding jet fuel was 7.85 cents in January and 8.23 cents in February, Fort Worth, Texas- based AMR said today in a federal regulatory filing. AMR projected its full-year seat-mile expense at 7.67 cents.

Revenue for each seat-mile will rise as much as 4.5 percent, excluding the airline’s regional flying, AMR said. The company said it will end the quarter with $6 billion in cash and short-term investments.

American joined other US carriers including JetBlue Airways Corp. and US Airways Group Inc. in grounding flights because of winter storms. Cancellations boost costs because airlines must spread expenses over fewer flights.

AMR said it has pre-purchased 29 percent of its needed jet fuel at a price equivalent to crude oil at $66 a barrel. It expects to pay $1.84 a gallon for jet fuel in the first quarter.

Those prices are higher than the average so far in 2006. Jet fuel for immediate delivery in New York harbor has averaged $1.75 a gallon, while crude oil on the New York Mercantile Exchange has averaged $57.59 a barrel. AMR said its fuel cost includes taxes and the losses from its fuel hedging program.

AMR should earn 58 cents a share in the first quarter, according to nine analyst estimates compiled by Bloomberg. Net income of $231 million in 2006 was AMR’s first annual profit since 2000.

|0x95| U.S. air travel was returning to normal yesterday after thousands of passengers on airlines including US Airways Group Inc. were stranded by a late winter snowstorm on the busiest weekend so far this year.

As many as 100,000 US Airways customers faced flight delays and cancellations after a six-inch snowfall in New York and ice at the airline's Philadelphia hub. Crowds of spring break travelers complicated rebooking efforts.