AMR Corp, parent of American Airlines reported a larger-than-expected quarterly loss as the company felt the effects of high fuel costs and volatile foreign exchange rates.

The carrier blamed its loss on the soaring price of fuel and a September spike in the value of the dollar, which erodes overseas sales as well as the value of funds repatriated by U.S. companies.

The results were weaker than many Wall Street forecasts because many analysts had not factored in the forex loss or the losses related to ineffective fuel hedging, said Helane Becker, a Dahlman Rose & Co director.

AMR's shares fell 5 percent to $2.68 on the New York Stock Exchange in morning trading on Wednesday.

It's American and it's disappointing because they should be doing better than they are, Becker said.

She said she wanted to hear more from airline managers on an analyst conference call later on Wednesday about what AMR can do to bolster its position vs rivals.

AMR is the third-largest U.S. airline behind United Continental Holdings Inc and Delta Air Lines Inc and is the only major carrier expected to post a third-quarter loss. Analysts have debated the chances of a bankruptcy filing from AMR as it works to cut its labor costs.

I guess they'll complain about the usual things they complain about -- labor, fuel, Becker said.

AMR said its third-quarter net loss was $162 million, or 48 cents per share, compared with a profit of $143 million, or 39 cents per share, a year earlier.

On that basis, Wall Street analysts had expected AMR to post a loss of 41 cents per share.

Revenue was $6.4 billion, which was in line with Wall Street expectations.

AMR, which saw its fuel costs rise 40 percent from a year ago, ended the quarter with $4.8 billion in cash and short-term investments, including a restricted balance of $474 million.

While the third quarter was challenging for American Airlines, we are taking aggressive actions to improve the company's performance and strengthen its foundation for long-term success, AMR Chief Executive Gerard Arpey said in a statement.

U.S. airlines are bracing for an economic downturn that could see travel demand sag this year. Some top airlines including AMR have announced service reductions to offset weaker demand.

With the results reported, industry experts now will await updates on AMR's efforts to reach a labor contract with its pilots union.

Labor costs are a big headache for American as its wages and benefits for its union workers are generally higher as a percentage of operating expenses than for employees of its rivals who restructured in bankruptcy within the last decade.

United's former parent, UAL Corp, used bankruptcy to slash labor costs and jettison worker pensions during its 2002-06 reorganization. Lower costs helped it survive and eventually left it better positioned for its 2010 merger with Continental.

AMR was on the verge of Chapter 11 bankruptcy in 2003 when unions agreed to concessions. But the airline remains the only major airline that still must fund worker pensions.

Speculation about a potential Chapter 11 filing boiled over earlier this month. AMR, American Airlines and its pilots reported significant progress in contract talks over weekend. The talks recessed on Monday but were set to resume Wednesday.

(Reporting by Kyle Peterson, editing by Gerald E. McCormick and Maureen Bavdek)