American Airlines' third quarter earnings fall sharply

American Airlines (AAL), the world's largest air carrier, on Thursday reported a 56 percent decline in its earnings for the third quarter of this year as compared with a year earlier.

The Texas-based company said in a report that it earned 737 million U.S. dollars in the third quarter of the year, down from 1.69 billion dollars a year earlier. Revenue reduced one percent but costs increased five percent.

In the second quarter of this year, the company's earnings reported a 44 percent drop as the company drove down operating costs, but a slip in revenue and 543 million dollars in income taxes that it did not owe last year took a toll on the bottom line.

During the April-June period, the airline reported a net income of 950 million dollars compared to 1.7 billion dollars for the same period a year earlier.

The company blamed more empty seats and higher labor costs for the decline in its third quarter profit this year, saying that third-quarter earnings would have dropped even more if it weren't for continuing low fuel prices.

The company and its regional subsidiaries spent 11 percent less on fuel than they did in the third quarter of last year. Labor costs rose 15 percent, however, as union workers won pay raises to make up for years of lower wages after the industry downturn in the previous decade.

Doug Parker, chief executive officer of AAL, said that the U.S. airline industry has been transformed, and American Airlines is well-positioned for success in the new world.

In the first quarter of this year, the company reported a 25 percent decline in its net income,which stood at 700 million dollars. Endit