Posted on 05/21/2008 2:13:17 PM PDT by Kimmers
American Airlines said Wednesday it plans to lay off possibly thousands of workers, charge passengers $15 for the first checked bag and cut domestic flights as it grapples with record-high fuel prices.
Chairman and Chief Executive Gerard J. Arpey didn't put a figure on the layoffs, but when asked whether he expected the figure to be in the thousands he said yes. He said he expects the fees will raise several hundred million dollars, but that was the best estimate he would give.
American, the nation's largest carrier, said Wednesday the fee for the first checked bag starts June 15 and that it would raise other fees for services ranging from reservation help to oversized bags. The other fees will mostly range from $5 to $50 per service, the airline said.
Rival Delta doesn't plan to match American's fee for the first checked bag, a spokeswoman said.
Last month American announced it would join other carriers in charging $25 for second bags checked for some passengers, but it wasn't immediately clear how Wednesday's announcement would affect that.
Its proposed fee for a first checked bag would exempt people who belong to elite levels of its frequent flyer programs, those paying full-fare tickets and those traveling overseas.
The planned fee on the first checked bag immediately ran into resistance. Delta Air Lines Inc. spokeswoman Betsy Talton said the Atlanta-based airline is considering all of its options in light of $130-a-barrel oil, but doesn't plan to match the $15 fee American announced.
The changes were being made to adapt to "the current reality of slow economic growth and high oil prices," Arpey said. He said the fees are an effort to get customers to pay for services they want.
American plans to cut domestic flight capacity by 11 percent to 12 percent in the fourth quarter. American had previously expected fourth-quarter capacity to fall 4.6 percent from the same period in 2007.
Parent AMR Corp. said reduced flying will lead to an undisclosed number of job cuts at both American and its American Eagle subsidiary.
AMR expects to retire 45 to 50 planes from its fleet, most of them gas-guzzling MD-80 aircraft. Those were the plane grounded for faulty wiring last month.
American said rising oil prices have increased its expected annual fuel costs by nearly $3 billion since the start of the year.
AMR shares tumbled $1.23, or 15 percent, to $6.97 after the announcement which came as its shareholders gathered for their annual meeting.
Overhead space has been rough and now it’s going to be a real nightmare.
Making your customers angry at you is not exactly a brilliant business model.
They’ve never grasped customer service.
If only they would make their customers sit on the tarmac for hours and hours with overflowing toilets and no a/c... that would certainly add to their brilliant plan to recoup fuel costs.
I guess raising ticket prices by $15 each way would have been too easy. No, let’s give folks the incentive to try and stuff even more items in the overhead bins and under the seats. Let’s see how much more we can stress out the flight attendants and irritate the already stressed out passengers.
It is a fact of life that all airlines are run by clueless morons who can always be counted on to do the exact opposite of what they should be doing. Is it any wonder that despite record numbers of people traveling by air, that these clowns as an industry somehow manage to always lose money?
AA has gone down hill at high port. I would prefer Amtrack to American Airlines!
I’m going to Alaska for 2 weeks and these IDIOTS want me to do it with a carry-on.
I’ll be flying the other AA (Alaska Airlines).
Woo-hoo!! Amid results that indicate that airline service has dropped significantly and passengers are more dissatisfied than ever before, American wants to help drive the last “coffin nail” into the airline industry.
Airlines apparently think we have no alternatives. We do - cars, buses and trains. Paying higher prices for worse service and treatment is not a winning business plan.
It seems to be working for the airlines, though. With each new outrage, the customer chirps right up: "Thank you sir, may I have another?" And he keeps right on flying.
Some of us have no choice. But... I’ll work the system even more to stay off American.
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