American yesterday reported a first-quarter profit for the first time in seven years, with lower fuel costs helping offset the $60 million revenue hit the airline took from a bad run of winter storms.

The carrier's $81 million net profit was a significant turnaround from the $92 million loss recorded last year. American was forced to cancel 3% of its mainline flights and 4% of its regional flights in the quarter due to bad weather, CFO Tom Horton said. The first-quarter storms will also make it harder for American to meet its goal to contain unit costs this year, Horton said.

American saw an operating profit of $248 million, which was more than double last year's profit. Despite the weather effect, overall revenue was up 1.6% to $5.43 billion in the first quarter, and American achieved its eighth straight quarter of yield gains with a 3.3% increase.

Consolidated unit revenue rose 3.8%, with mainline unit revenue growing 4.5%. The mainline increase was lower than the growth seen in the fourth-quarter of 2006, but Horton points out that comparisons are tougher due to the unit revenue growth of more than 10% seen in last year's first quarter.

Fuel costs were down 4.3%, but mainline unit costs were still up 0.9% -- representing a 1.6-point negative shift from earlier predictions. American blamed this worse-than-expected result on the weather disruptions. Mainline costs excluding fuel increased by 2.2% in the first quarter.

For the second quarter, mainline unit costs are expected to be up 2.1%, and 2.8% excluding fuel. Full-year unit costs are forecast to increase 1.6%, and 1.1% ex-fuel. Fuel cost is estimated at $2.09 cents per gallon for both the second quarter and full year, an increase from previous projections.

Mainline traffic was down 1.3% on a 2.5% capacity cut in the first quarter, with load factor rising 0.9 points to 78.1%. American expects second-quarter load factor to be down 3.1%, with a 1.8% drop forecast for the full year -- comprising a 2% cut in domestic operations and a 0.9% decrease in international. Second-quarter load factor is predicted to be about flat with last year's level.

American ended the quarter with $5.9 billion in cash and short-term investments. The company has reduced net debt to $12.1 billion, compared with $15.4 billion at the end of the first quarter in 2006.