Strong demand at American Airlines; lean times ahead?

Double-digit increases in fuel and labor costs caused second-quarter profit at American Airlines to fall 15 percent despite higher revenue.

The world’s biggest airline still beat Wall Street expectations, earning $803 million in the quarter, which marks the start of the key summer-vacation travel season.

Like other airlines, American is enjoying demand that is strong enough to push up average fares and fees. A key figure that roughly parallels fares jumped 5.7 percent in the quarter, but American on Friday predicted a much more modest increase — between 0.5 percent and 2.5 percent — in the same figure during the July-through-September period. An executive told analysts the fourth quarter would be better than the third, although he gave no numbers.

Investors, increasingly worried about airlines cutting prices to hang on to their share of passengers, sold off shares Friday afternoon.

Shares of American Airlines Group Inc. fell 58 cents, to $49.42.

American’s results wrapped up a rocky earnings season for the major U.S. airlines. It started with a thud when United Airlines gave a poor revenue prognostication for the third quarter and continued with a weak third-quarter forecast on average fares from Southwest Airlines, which carries more U.S. passengers than anyone. Along the way, executives at several airlines spoke about lower fares in markets stretching from New York to Florida to Denver.

Price-cutting during the peak summer season is rare, said Cowen and Co. analyst Helane Becker. She said it was understandable that American would try to calm nervous investors by sounding upbeat about the fourth quarter, but it was too early to tell what might happen given all the talk from other airlines about discounting domestic fares.

Airlines are looking for new ways to raise revenue, including cramming more people in their planes.

American recently backed off a plan to move the last three rows in new Boeing 737 jets closer together. It would have brought in…

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