American’s Parent Posts a Modest Net : Transportation: Labeling the improvement ‘inadequate,’ AMR Corp. says it still plans to cut capital spending.

AMR Corp., the parent company of American Airlines, reported its second consecutive rise in quarterly earnings Wednesday, but labeled the improvement “inadequate” and said it would cut back new capital spending.

The company said net earnings climbed more than 7% to $70.3 million in the third quarter from $65.6 million a year ago.

Revenue rose to $3.52 billion from $3.05 billion.

But AMR was still in the red for the year thus far, with a net loss of $115 million, or $1.70 per share, for the first nine months of 1991.

That compared to a nine-month net profit of $175.5 million a year ago.

“The third quarter was the second consecutive quarter in which we have been able to report modest earnings,” AMR Chairman Robert L. Crandall said in a statement.

“While we are encouraged by this trend, earnings remain inadequate, the rate of improvement is frustratingly slow and the underlying fundamentals of the airline business are not yet promising.”

However, the results were better than expected and set off a Wall Street rally in airline stocks that made for sharp gains in the shares of rival carriers, UAL Corp. and Delta Air Lines Inc.

AMR’s third-quarter earnings per share slipped to $1.02 from $1.05, after a 10% rise in the number of its shares.

But the result was well above a Wall Street consensus forecast of 66 cents per share.

“It’s better than expected,” County NatWest USA analyst Rose Ann Tortora said.

“People think this is a major turn and we’re off to the races.”

AMR shares climbed $3.50 to $65 on the New York Stock Exchange. UAL, parent of United Airlines, advanced $5.125 to $133.

Delta was up $1.625 at $69.625.

Crandall blamed earnings on both widespread and uneconomic fare discounting and a continuing upward trend in unit costs.

He said the company would curtail new capital commitments.

AMR said in September that American Airlines would defer $500 million in new ground spending and delay, or pass, on options for up to $3.6 billion of new aircraft planned for delivery beyond 1993.

Crandall said bright spots in the third quarter included the success of American’s new services to Heathrow Airport in London and continuing strength in Latin America.

A new service between Seattle and Tokyo, launched on Oct. 1, would provide a foundation for continuing growth in the Pacific, he said.