Northwest Airlines reported a quarterly net loss on Wednesday, falling victim, like its rivals, to the high fuel prices that have forced industry-wide downsizing.

The loss, excluding one-time items, was less than expected, and Northwest's shares rallied in early trade, before retreating somewhat. In general, airlines have reported smaller second-quarter losses than were expected.

"They've all pretty much beaten expectations," said Standard & Poor's equity analyst Jim Corridore. "Even though the numbers are horrible, they're better than the horribleness expected."

Northwest shares were up 5.95 percent at USD$9.62 on the New York Stock Exchange. The Amex airline index was up 1.25 percent.

Airline shares gave back early gains as the price of crude oil, which is directly linked to the price of jet fuel, rebounded slightly from a dip below USD$126 a barrel. Nymex crude has fallen rapidly from a record high above USD$147 reached on July 11.

Northwest, which plans to merge with Delta Air Lines, reported a second-quarter net loss of USD$377 million, compared with a profit of USD$2.1 billion a year earlier.

Northwest exited bankruptcy in the second quarter of 2007. Profit for that quarter included USD$1.9 billion in gains related to reorganization.

Other airlines, including United Airlines and US Airways, also wrote down goodwill in the second quarter.

Northwest said operating revenue was USD$3.58 billion, up 12.4 percent from a year earlier. The carrier spent USD$1.21 billion on fuel, an increase of 41.2 percent.

Northwest ended the quarter with USD$3.3 billion in unrestricted liquidity.

"The unprecedented run-up in oil prices continues to pose great challenges for Northwest Airlines and the entire airline industry," Northwest Chief Executive Doug Steenland said in a statement.

Northwest said this month it would trim its staff by 8 percent as part of an 8.5 percent to 9.5 percent fourth-quarter capacity reduction aimed at offsetting the high cost of jet fuel.