FORT WORTH, Texas - AMR Corp.'s American Airlines, the world's largest air carrier, will eliminate more U.S. flights in the first quarter to better match demand, and might cut more jobs.
Flight and seat capacity in the United States and Canada by March will be 3.3 percent lower than a year earlier, American said. Its earlier plan called for a 0.1 percent reduction. The airline will cut flight frequencies on slower days in some markets, said spokesman Al Becker.
AMR lost $2.98 billion in the first nine months of this year, as the Sept. 11, 2001, attacks and the weak U.S. economy reduced air-travel demand and as airlines lowered fares to lure passengers. American is trying to reduce annual costs by up to $4 billion and has identified ways to produce about half of that amount, including eliminating 7,000 jobs, cutting flights and grounding planes.
"Although the airlines have cut capacity as an industry back to '98 levels, revenues are back to '95 levels," said Goldman, Sachs & Co. analyst Glenn Engel, who rates AMR an "underperform" and doesn't own the stock. "You still have this gap, and until demand improves, you're going to see airlines nickel-and-dime their way out of supply to get it back into balance."
American is reviewing the impact of the latest capacity reductions on jobs, and "we don't know yet, but there may be a need for more layoffs," said Jeff Brundage, vice president for employee relations, in an interview.
The carrier said its domestic capacity for 2003 will be down about 5 percent more because of the first-quarter reduction. The airline earlier planned a 3.6 percent decline. International capacity isn't being reduced because demand is higher for those flights.
American declined to say how many flights will be cut or identify cities where the reductions will occur. They will occur across the domestic system in cities of varying size, and the airline won't pull out of any markets it now serves, Becker said.
"None of these reductions is concentrated in any particular city or any particular region of the country," he said, calling them a "fine tuning" of the domestic system to bring it in line with demand at the historically slowest period of the year.