By Keith L. Alexander

Washington Post Staff Writer

Thursday, January 20, 2005; Page E02

Squeezed by rising fuel prices and an inability to increase fares, AMR Corp., parent company of American Airlines, reported that its fourth-quarter loss more than tripled from the same period a year ago.

American Airlines -- the world`s largest carrier -- has tried different approaches in a bid to return to profitability. It has reduced the number of domestic flights to cut costs while keeping fares low enough to compete with other carriers. It also has begun selling meals on its planes and now charges for in-flight entertainment.

But the measures have not brought profitability from operations. Yesterday, AMR reported a loss of $387 million ($2.40 a share), compared with a loss of $111 million (70 cents) for the same period a year ago. Yesterday`s results included a one-time gain of $86 million.

As American cuts back on flights, competing airlines continue to expand service, putting more pressure on American to remain competitive, said chief executive Gerard J. Arpey.

``The revenue environment is not improving in the near term. We have to continue to find cost savings wherever possible,`` Arpey said. ``We have to find ways to reshape our business to drive for better results.``

Other airlines are taking different tactics. Earlier this year, Delta Air Lines -- the nation`s third largest carrier -- overhauled its fare system, cutting prices by as much as 50 percent on domestic flights to increase passenger traffic and fend off the rapidly expanding low-cost competitors such as Southwest, JetBlue and Air Tran. Delta`s price cuts were matched in most markets by its competitors.

UAL Corp., the parent company of United Airlines, the nation`s second-largest carrier, has been in bankruptcy protection since December 2002. United has cut about $2.5 billion in costs, mostly through reductions in employees` pay and benefits. It is now trying to trim an additional $725 million through new labor contracts.

``It`s tough shrinking your way to profitability and continuing to ask for concessions from employees,`` said airline analyst Ray Neidl of Calyon Securities. ``But you have to have a lower cost structure in this new environment to survive.``

Another major airline reported a loss yesterday. Northwest Airlines Corp., the nation`s fourth-largest carrier, said it lost $420 million ($4.84) in the fourth quarter, compared with a profit of $363 million ($3.60) in the same period in 2003. For all of 2004, Northwest lost $878 million ($10.16), compared with a profit of $236 million ($2.62) in 2003.

Northwest is also trying to cut costs. In November, the airline`s pilots and mangers agreed to pay cuts of about $300 million a year. But Northwest is seeking an additional $950 million in employee pay and benefit reductions.

Fuel remains a major factor in the airlines` troubles. American said its fuel costs rose by $477 million, a 67 percent increase from the fourth quarter of 2003.

While other carriers reported losses, Southwest Airlines Inc. seems on track to be the only major U.S. airline to report a profit for the quarter, although it too had an earnings decline. Southwest`s fourth-quarter profits dropped 15 percent, to $56 million (7 cents), compared with $66 million (8 cents) in the same period last year. It benefited from an aggressive fuel-buying program that locked in prices more than a year ago, before oil prices spiked. For 2004, Southwest had a profit of $313 million (38 cents), compared with $442 million (54 cents) in 2003.

American`s cost-cutting enabled it to reduce its losses for the year. The airline lost $821 million last year, down more than 37 percent from a $1.3 billion loss in 2003.

The airlines are expecting 2005 to be another difficult year, and that may mean more cost and job cuts. In announcing its results, American forecast a loss for 2005 and said it plans to delay the delivery of 54 of 56 aircraft from Boeing Co., deferring $1.4 billion in capital spending.

American is trying to find ways to increase revenue. It`s adding more seats to its planes, virtually eliminating its ``More Room Throughout Coach`` marketing campaign. By year-end, American expects to have added more than 12,000 seats to its fleet.

``More seats will make us more competitive,`` Arpey said.