Continental says it is taking the necessary action to return to profit

America's fifth-largest airline said its first-quarter losses rose to $184m (�96m), compared with a loss of $124m a year earlier.

However, smaller rival America West said it had jumped back into profit.

The number eight US carrier said gains from fuel hedging transactions helped it post quarterly profits of $33.6m.

'Painful action'

American West said its first-quarter results included a net gain of $60.5m from fuel hedging transactions.

The company reported a $1.6m quarterly loss during the same period last year.

Continental said it had been hit by a 39.5% increase in fuel prices during the quarter. Tough competition made it difficult for the company to raise fares to cover the cost of fuel.

"While we lost money in the first quarter, I appreciate the commitment shown by my co-workers who took painful yet necessary action to quickly ratify new agreements," said Continental chairman and chief executive Larry Kellner.

"Even though we still have more work to do, we have made significant progress to move our company closer to profitability."