Even higher fares can't help American Airlines: Shares slump on deeper loss.

Shares in American Airlines slumped on Wednesday after the third-biggest US carrier by revenues reported a larger than expected third-quarter loss driven by soaring prices for jet fuel and volatile currency exchange rates.

AMR Corp, American’s parent company, has suffered a difficult last few months as investor concerns about its high debt load, weak revenue growth and string of quarterly losses have led to violent swings in its stock price.

“While the third quarter was challenging for American Airlines we are taking aggressive actions to improve the Company’s performance and strengthen its foundation for long-term success,” Gerard Arpey, chief executive of AMR, said in a statement.

Earlier this month, the company said that it would follow many of its US peers and cut capacity during the fourth quarter and retire a number of its older aircraft in an effort to reduce its costs and sustain its pricing power.

The company has also developed joint ventures with key partners in Europe and Asia, placed a large order for more fuel-efficient aircraft and redoubled efforts to agree to new contracts with its workers in order to cut its labour costs.

For the three months to the end of September, American swung to a net loss of $162m compared to a net profit of $143m in the same period in 2010. That produced a net loss of $0.48 per share, higher than the loss of $0.43 per share predicted by most analysts.

In its earnings statement, American blamed a combination of factors for the results. Jet fuel prices jumped 41 per cent compared to 2010, while the impact of certain fuel hedges and volatile currency rates increased American’s net loss by about $50m or about $0.15 per share.

At the end of September, AMR had about $4.8bn of cash and short term investments on its balance sheet, down from $5bn at the end of the third quarter of 2010. Net debt, meanwhile, was $12.6bn, up from $11.6bn in the same period last year.

Still, the results offered some good news for airline investors. Since the start of the year, airline stocks have been pummeled on fears that business and consumer demand for air travel will slacken amid the faltering global economic recovery.

But on Wednesday, AMR’s operating results offered few indications of falling demand. Total revenues climbed 9.1 per cent to $6.4bn compared to the same period last year, including a 5 per cent rise in cargo revenues to $176m.

At the same time, American was able to increase the prices it charged its customers. During the third quarter, passenger yields, a measure of the average fares paid by passengers, increase by 7 per cent compared to the same period last year.

In early trading, shares in AMR Corp, which have lost about two-thirds of their value since the start of the year, fell as much as 7 per cent before recovering slightly to $2.68, down about 5 per cent for the morning session in New York.

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