Continental Airlines Inc. asked for antitrust immunity from the Department of Transportation on Wednesday as it moves closer to joining the Star Alliance.

Average domestic airfares rose 4.4 percent in the first quarter of 2008 compared to the same period a year earlier, the government said Wednesday in an analysis that was based on a small sample of itineraries and excluded some high-priced destinations.

Three major U.S. airlines reported losses on Tuesday, sapped by soaring fuel costs, but stocks in the sector rose sharply as investors hoped falling crude oil prices signaled relief ahead.

By Kyle Peterson

New travel fees mean hundreds of millions of dollars a year for beleaguered airlines, and executives say they need them more than ever as fuel costs continue to suck profits out of the industry. Plane tickets, it seems, now come with only the bare bones promise of getting from Point A to Point B.

THE CHALLENGE: Fuel prices have cooled recently, but they're still sucking profits from the airline industry. Jet fuel rose above $4 per gallon for the first time in the three-month period that ended June 30, almost double its cost during the same period last year. Most carriers have posted big losses this quarter including United parent UAL Corp., American Airlines parent AMR Corp., Delta Air Lines Inc., and US Airways Group Inc.

Stocks surged in the final hour of trading as a sharp drop in oil prices and an analyst note prompted a late rally in financials. The Nasdaq eked out a gain but investors still punished select techs, including Apple and Texas instruments after the firms dispatched disappointing results.

United Airlines shares zoomed up 45 percent on Tuesday after it announced plans for a major cash infusion, a smaller-than-expected quarterly loss, and reductions in flying and jobs intended to help it fight high fuel prices.

United Airlines parent UAL Corp. is extending its credit card agreements with Chase Bank USA, generating a $600 million payment from the bank and increasing its cash position by about $1.2 billion.

The losses keep piling up for airlines, as three of the nation's biggest carriers said Tuesday high fuel costs overwhelmed higher revenue in the quarter that ended June 30.

Among the earnings stories for Tuesday, July 22, from AP Financial News:

UAL Corp <UAUA.O> on Tuesday posted a steep quarterly loss on soaring fuel prices and said it would eliminate nearly 13 percent of its work force as part of a major downsizing, sending shares of the United Airlines parent soaring more than 16 percent.

CHICAGO (Reuters) - UAL Corp <UAUA.O> on Tuesday posted a steep quarterly loss on soaring fuel prices and said it would eliminate nearly 13 percent of its work force as part of a major downsizing, sending shares of the United Airlines parent soaring more than 16 percent.

United Airlines parent UAL Corp. said Tuesday it lost $2.73 billion in the second quarter on a combination of accounting charges and high fuel prices.

Airline shares gave up much of last week's gains, as oil prices rose on Monday and a survey of airline executives showed their already pessimistic outlook for profits over the next year growing dimmer.