The facts are that business travel, which historically constitutes a major portion of our business, is not rebounding the way leisure travel is, and average fares are down because of heavy discounting

Don Carty AMR

Chief executive Don Carty forecast a second quarter after a "very tough" first due to the continuing depressed state of the air travel sector, but tried to put an positive spin on the news.

"There is no question that our business overall is improving," Mr Carty said, adding consumer demand for air travel is climbing.

The net loss of $575m compared with a $43m loss in the same quarter last year, and a record loss in the fourth quarter of 2001 of $798m.

Tough times

"The facts are that business travel, which historically constitutes a major portion of our business, is not rebounding the way leisure travel is, and average fares are down because of heavy discounting," Mr Carty said.

"That, combined with rising labour, security and insurance costs, made for a very tough first quarter and, at the current slow pace of revenue recovery, I expect we will post a loss in the second quarter as well."

AMR said total operating revenues fell to $4.14bn from $4.76bn a year earlier and operating losses widened to $729m from $4m.

Two of American Airlines' planes were involved in the 11 September attacks and the company is subject of a compensations suit from the deaths.

The carrier cut 20,000 jobs in the immediate aftermath of the attacks in an attempt to cut costs.