US Airways said yesterday that losses narrowed during the first quarter despite a sharp reduction in traffic and a spike in fuel costs -- excluding unusual one-time bankruptcy adjustments that resulted in a paper profit of more than $1.6 billion.

The Arlington, Va.-based carrier reported a pretax loss of $282 million for the three months ended March 31, vs. a pretax loss of $435 million in the year-ago quarter. Revenue fell 10 percent to $1.53 billion from $1.71 billion.

As a result of its emergence from bankruptcy on March 31, the airline recognized a $1.92 billion gain in so-called other income -- the net result of the elimination and restructuring of more than $5 billion of debts, aircraft leases, pensions and other obligations, minus more than $3 billion of claims, fees and other cost adjustments. The net result was a profit of $1.635 billion.

US Airways Chief Executive Officer David Siegel expressed disappointment with the results, noting that "the company's successful completion of our restructuring efforts" had been overshadowed by the decline in passenger traffic as a result of the war and a weak economy.

During the past year -- including the nearly six months US Airways was in Chapter 11 -- the airline was able to obtain about $1.9 billion in annual cost-saving concessions from its employees, vendors and aircraft lessors. It also has instituted work-rule changes that it hopes will further reduce its labor costs, once the highest in the industry.

As a result of these changes, US Airways said yesterday that it had outpaced the industry in improving the costs of its mainline operations when measured on a per available seat mile. The company said it now ranked between Continental and America West airlines.

William Lauer, an airline industry analyst and chairman of the Tarentum-based Allegheny Management Capital, said the first-quarter results "reflected significant gains in operating efficiency."

The airline's cash position also improved, aided by $1 billion obtained with the backing of federal loan guarantees and a 5 percent across-the-board wage cut imposed at the outbreak of the war with Iraq. At the end of the quarter, the airline said it had $1.27 billion of unrestricted cash and equivalents on hand.

Although major combat operations have ended in Iraq, Siegel said he did not expect that passenger traffic would rebound quickly. He warned that the airline might "be forced to make some modest reductions" in the size of its fleet to further protect the airline's financial position.

But Roy Freundlich, spokesman for the pilots union, said that under the terms of its contract with the company, US Airways may not reduce size of the fleet below its current level of 279 unless it obtains the consent of the pilots.

Freundlich said he was puzzled as to why Siegel suggested a cut in the fleet size might be necessary. "The war is over and the industry is already rebounding," he said.

On a more optimistic note, Siegel said the airline expected to announce this month the purchase of regional jets. Many of these regional jets are expected to be part of the carrier's newly created subsidiary, MidAtlantic Airways, based in Pittsburgh.