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WASHINGTON - AMERICAN Airlines announced on Wednesday it would cut domestic flights significantly, shed workers and raise some fees charged to passengers as it battles to offset rocketing crude oil prices.
The largest US carrier said it planned to slash its domestic flight capacity by up to 12 percent during the fourth quarter of the year and to retire at least 75 aircraft in the face of spiking jet fuel costs.
The airline's parent firm AMR said its moves would result in an unspecified number of job losses at American Airlines and American Eagle Airlines. Some facilities could also be closed as part of the business overhaul.
'The airline industry as it is constituted today was not built to withstand oil prices at US$125 (S$170) a barrel, and certainly not when record fuel expenses are coupled with a weak US economy,' AMR chairman and chief executive Gerard Arpey said in a statement.
American announced its reforms as world oil prices jumped to new all-time peaks Wednesday, smashing the US$132 barrier for the first time.
Mr Arpey said the company's management could not afford to sit by hoping that oil prices would fall anytime soon as he participated in an annual shareholders' meeting in Fort Worth, Texas.
American Airlines pilots and flight attendants mounted a protest outside the meeting to demonstrate against what they said is the 'uncaring attitude' of the carrier's top management.
The Association of Professional Flight Attendants (APFA) is calling for Mr Arpey and other senior executives to resign. It says the executives have reaped millions of dollars in bonuses while the airline has been struggling.
'They grabbed millions of dollars in bonuses while pushing passengers to the side and disrespecting employees who've sacrificed so much to help the airline survive,' said APFA president Laura Glading.
Losses
AMR reported a net loss of US$328 million during the first quarter compared with a profit of US$81 million a year earlier. The loss was largely blamed on record jet fuel prices.
American paid US$665 million more for fuel during the first quarter of this year compared with last year. Its January-March fuel bill surged 45 per cent on an annual basis.
The double-digit cut to its domestic schedules marks a more aggressive drive from a prior stance in April when the company had said it was expecting to reduce capacity by 4.6 per cent.
Arpey said the flight reductions would help the airline cut its costs.
The airline anticipates retiring 40-45 aircraft, which will mostly be MD-80s, but will also include the mothballing of some Airbus A300 jets. It also plans to retire 35-40 regional jets and some turboprop aircraft.
In a bid to boost its pinched revenues, Arpey said American was introducing a new US$15 fee for each passenger's first checked bag, although business and international flyers and customers who buy full-fare tickets will be exempt from the fee.
Fees, covering reservations, pet transportation and oversized bags, will meanwhile be increased from five to US$50. The carrier said the fee hikes would generate increased revenues.
Other companies are also suffering from high oil prices. Delivery giant FedEx has blamed oil costs for a profit slide and big auto manufacturers such as General Motors are reeling from falling truck sales.
Oil companies, however, are banking handsome profits.
Top energy company executives from ConocoPhillips, Chevron, BP America and ExxonMobil were called to testify before Congress Wednesday about skyrocketing energy costs.
Mr J. Stephen Simon, a top ExxonMobil executive, told lawmakers that the oil giant was also having to pay more to purchase oil supplies and that high refining costs and government taxes had also inflated prices. -- AFP
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