AMR Announces Capacity Reductions and Aircraft Retirements

AMR, American Airlines’s parent company, has announced significant reductions to its 2008 domestic flight schedule, including a fourth quarter mainline domestic capacity reduction of 11% to 12%, compared to 2007.

The company said that as a result of significantly reduced flying, it expects to retire 40-45 mainline aircraft from American’s fleet, the majority of which will consist of MD-80s but will also include some Airbus A300 aircraft. The capacity reductions will also result in the retirement of 35-40 regional jets, as well as a number of turbo-prop aircraft from AMR’s regional affiliate fleet.

The capacity changes will result in workforce reductions at both American Airlines and American Eagle Airlines and could result in facility closures or facility consolidation. AMR is assessing the scope and location-specific impact of any workforce reductions resulting from the capacity reductions.

The company has also introduced a $15 fee for first-checked baggage, given the increasing costs of transporting checked baggage, effective June 15, 2008. American Airlines also said that it has increased its fees for certain other services, ranging from reservation service fees to pet and oversized bag fees. The increases mostly range from $5 to $50 per service.

Gerard Arpey, chairman and CEO of AMR, said: “The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak US economy. Our company and industry simply cannot afford to sit by hoping for industry and market conditions to improve.”