Red ink means airlines will try to bleed travelers

Excluding one-time items, Delta earned a profit of $137 million, or 35 cents a share, in the second quarter. Analysts polled by Thomson Financial, on average, forecast profit of 10 cents a share. Their estimates usually do not include one-time items.

Revenue rose 10 percent to $5.5 billion.

Delta recorded special charges totaling $1.2 billion in the second quarter, including a $1.1 billion non-cash charge, net of a $119 million tax benefit, related to the decline in Delta's market value due to sustained record fuel prices.

Delta ended the quarter with $3.3 billion in unrestricted cash and short-term investments. It also has $1 billion available under a revolving credit line.

Delta spent $1.68 billion on aircraft fuel and related taxes in the second quarter, compared to $1.11 billion a year ago.

Delta intends to cut domestic capacity by 13 percent during the second half of the year. The company is now targeting to remove the equivalent of 100 regional aircraft from its system by the end of the year.

American's parent AMR, meanwhile, said its loss in the second quarter was equivalent to $5.77 a share, compared to a profit of $317 million, or $1.08 per share, a year ago.

Excluding special charges to write down the value of its fleet, AMR said it would have lost $284 million, or $1.13 per share.

Analysts expected AMR to lose $1.40 per share. The company's revenue rose 5.1 percent to $6.18 billion. Fuel costs spiked to $2.42 billion — an increase of about $780 million from a year ago.

AMR announced Wednesday that it would speed up the retirement of its 34 Airbus A300 aircraft by the end of next year, three years ahead of schedule. It ended the quarter with more than $5 billion in unrestricted cash and short-term investments.

Delta shares rose $1.24, or 26.6 percent, to close at $5.91 in Wednesday trading. AMR shares jumped $1.41, or 32 percent, to end at $5.82.

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