United Continental Holdings – the largest airline in the world – slipped to a $213 million loss in the first quarter as fuel costs soared.

A 26.5 per cent rise in the cost of fuel – taking the total to $2.67 billion – offset a 10.8 per cent increase in revenue, largely generated through price increases.

United also confirmed it would drop growth plans for the year, reveling flying capacity would be cut by one per cent starting in May.

United Continental will then cut by four per cent in September, traditionally a slower time of year for airlines.

United said it was reducing flying to Japan by 14 percent next month compared with May 2010.

Similar trends were also reported by American Airlines earlier, with revenue increases offset by surging fuel costs.

Both carriers have been hard hit by falling demand, especially to Japan, while costs have risen sharply.

As a result, United Continental shares have fallen 16 per cent since the day before the Japan earthquake.