DALLAS (AP) — American Airlines parent AMR Corp. says it lost $375 million in the first quarter as people flew less during the recession than they did a year ago, wiping out the benefit of cheaper fuel.

Still, the loss reported yesterday was much smaller than Wall Street expected, and AMR's long-depressed shares jumped 83 cents, or 19.7 percent, to $5.05 in afternoon trading.

AMR lost $1.35 per share in the first quarter, including a charge of five cents per share related to leases on retired aircraft. Revenue was $4.84 billion.

Analysts surveyed by Thomson Reuters expected AMR to lose $1.68 per share on revenue of $4.73 billion. A year ago, the carrier lost $341 million, or $1.37 per share, on $5.70 billion in revenue.

AMR was the first big US airline company to report first-quarter results, and analysts expect all the major carriers to post losses, as traffic fell sharply. American's traffic tumbled 12 percent in the quarter, compared with a year ago, although the drop-off was a slightly smaller 10.9 percent in March.

Chief executive Gerard Arpey said this year's outlook remained challenging.

"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," he said in a statement.

The recession has undercut travel demand and made it harder for airlines to raise fares. Just the opposite — fare wars — have broken out as carriers fight over a dwindling pool of passengers.

American and other airlines have responded to the downturn by cutting flights to save money and regain pricing power. Further lay-offs are possible, as was made clear on Wednesday when Air France announced it would cut 2,500 jobs.

But many analysts predict that the airline industry hit bottom in the first quarter. They expect AMR to post a small loss in the April-June quarter and turn a profit in the July-September peak travel season.

UBS analyst Kevin Crissey said AMR reported higher first-quarter revenue and lower costs than he forecast, and that investors bid up the shares on hopes that second-quarter costs will also be lower than expected.

American now expects to reduce costs per mile, excluding fuel, by 11.5 percent in the second quarter and 10.4 percent for the year, a more aggressive cost-cutting forecast than it gave in January.

The airline didn't offer revenue forecasts. Helane Becker, an analyst for Jesup & Lamont, said revenue will be "the key to whether or not this surge in the share price is sustainable".

American also continues to struggle with labour-management tensions and is locked in slow-moving contract negotiations with all three of its unions, which want raises. This week, ground workers protested in Fort Worth against millions in stock-based bonuses for several hundred management employees, and yesterday the pilots' union said executives were "enriching themselves at the expense of front-line workers."

The annual awards are based on how AMR's shares performed over a three-year period compared with other airline stocks, and they will be smaller this year. The company calls the payments part of regular compensation for managers.

Fort Worth-based AMR told employees last week it had frozen most hiring and wouldn't give raises to US non-union employees, more than one-fourth of its work force. Arpey said tight credit markets posed another challenge for AMR, and the company boasted yesterday that it had received a new financing commitment for two new aircraft. AMR plans to add 76 new Boeing 737-800 aircraft by the end of 2011 — the first two went into service on Tuesday — and the company said it had financing commitments for deliveries "well into the fourth quarter of 2010."