Despite drastically lowering its labor expenses, US Airways lost $62 million in the second quarter as the amount it spent on fuel jumped 69 percent.

US Airways Chief Executive Officer Bruce Lakefield called the results "disappointing" in a telephone message to employees yesterday. "Record fuel prices continue to offset the tremendous progress we have made in reducing costs," he added in a press release.

The airline's labor costs were down 36 percent compared with the second quarter of 2004, a byproduct of $1.1 billion in annual concessions coaxed from labor unions during US Airways' second trip through Chapter 11 bankruptcy. But with oil hovering at record highs, fuel costs increased from $263 million to $445 million -- a 69 percent jump.

Total costs at the airline rose 1.6 percent, to $1.9 billion; fuel was the single biggest expense.

A year ago, US Airways recorded a $34 million profit despite labor costs that were $225 million higher.

If fuel had stayed the same as a year ago, US Airways would have made $120 million in this year's second quarter -- typically the busiest and most profitable period of the year for the airline industry.

Revenue in the latest quarter was flat at $1.96 billion.

As it tries to emerge from Chapter 11 bankruptcy this fall, US Airways is hoping to solve many long-standing problems by completing a merger with America West Airlines.

The deal still requires approval from a U.S. bankruptcy judge, the Department of Transportation, US Airways creditors and America West shareholders.

Both airlines expect to get the endorsements by late September or early October.

US Airways views a merger with the smaller America West as a way to emerge as a leaner, stronger carrier able to make money even if oil stays above $50 a barrel.

Last week, America West reported a second-quarter profit of $13.9 million, one of six large carriers to end the period in the black. Northwest Airlines, Delta Air Lines, United Airlines and US Airways were the only carriers among the top 10 to report losses.

US Airways, despite many cutbacks in recent years, is still the dominant carrier at Pittsburgh International Airport and employer of about 3,500 locally.

Four years ago, it employed about 12,700 in the Pittsburgh area.

A few hundred more local workers ended their tenure with the company yesterday as US Airways closed a Green Tree reservations center that had been open for 35 years.

"Closing the Pittsburgh center is a step we do not take lightly," Lakefield said in a telephone message. "We share the sadness our employees are feeling as they bid each other farewell."