American announce big staff / plane / route cuts; $15 bag fee
22.05.08
At its annual meeting yesterday, American Airlines officials said that record fuel costs, growing concerns about the US economy and a ‘difficult competitive environment’ will see it introduce additional fees - including a $15 charge for passengers first bags - thousands of staff layoffs, the retirement of more than 75 aircraft from its fleet and significant route cuts this winter.
Gerard Arpey, chairman and chief executive of the group said fuel prices increased more than 10% since its first-quarter results five weeks ago, when it lost $328 million. The company's fuel expenses were up more than $660 million in the first quarter. He said: ‘If $125-per-barrel oil is the new reality, preserving the progress we have made is going to require some significant and difficult changes.'
The airline expects to cut between 11 - 12 percent of its domestic flights in the fourth quarter. This will result in the grounding by year's end of about 40 to 45 American Airlines jets, 35 to 40 regional jets at subsidiary American Eagle, plus a number of Eagle turbo-props. The airline has not released specific flights affected.
The reductions in its flight schedule will result in job cuts at American and its subsidiary, American Eagle. Mr Arpey said layoffs would be across the board, could number in the thousands and could result in facility closures or facility consolidation. The airline currently employs 85,500 staff.
The new baggage fee for US domestic routes is effective for tickets purchased on or after June 15. The airline also increased fees for certain other services, ranging from reservation service fees to pet and oversized bag charges. These mostly range from $5 to $50 per service. The company estimates that new and increased fees will generate several hundred million dollars in incremental annual revenue.
Mr Avery added: ‘Most of the big European carriers, such as BA, Air France, Lufthansa, easyJet, Ryanair and bmi, are relatively well capitalised, but at $120 per barrel you would have to ask questions about a lot of airlines, especially the American ones.’ [Oil traded above $135 a barrel today.]
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