AA U. S. Capacity Reductions Permanent

CaptJax

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Exec: American's US capacity reductions permanent
AP ONLINE
Posted: 2008-09-09 21:08:00

FORT WORTH, Texas (AP) _ Despite the big drop in fuel prices over the last two months, domestic capacity reductions American Airlines has been making are permanent, Chief Financial Officer Tom Horton said Tuesday as he also suggested that the industry could see more consolidation in the future.

American, like other carriers, has announced U.S. capacity reductions due to the high price of fuel, which soared to more than $147 a barrel on July 11. American, a unit of Fort Worth-based AMR Corp., said it would cut domestic capacity by as much as 12 percent after the busy summer travel season.

But since its July high, the price of oil has retreated. Light, sweet crude for October delivery settled at $103.26 on Tuesday on the New York Mercantile Exchange, the lowest settlement price since April 1.

Even so, Horton said firmly in an interview with The Associated Press that the capacity cuts are for good.

"The airplanes that we're grounding are older generation planes," Horton said. "They burn 35 percent more fuel per seat than the new generation planes.So, when you ground those planes, it would be very difficult to bring them back, not just in operations cost but also in maintenance infrastructure."

He added, "So, I would characterize those as permanent capacity reductions."

As for consolidation, Horton said he doesn't think Atlanta-based Delta Air Lines Inc.'s pending acquisition of Eagan, Minn.-based Northwest Airlines Corp. is the last combination the industry will see.

"I think that the U.S. industry has more consolidation in its future," Horton said. "I don't know if it's today, or tomorrow or five years from now. And I think the entire global airline industry has more consolidation in its future."

Earlier this year, American had alliance talks with Houston-based Continental Airlines Inc., but Continental later struck an alliance deal with UAL Corp.'s United Airlines.

Asked if American might consider a full combination with another airline in the future, Horton said the airline tends to keep quiet about consolidation issues and the company's strategic activities.

"But, if you look at what we've done, when we see an opportunity that we think makes sense for our company and our shareholders and our employees, we'll do it," Horton said.

Asked if that meant that if down the road a merger makes sense for those constituencies, American would consider it, Horton responded, "Yeah. We never rule anything out that's in the best interest of shareholders, employees, customers."
 

mrebuck

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Asked if that meant that if down the road a merger makes sense for those constituencies, American would consider it, Horton responded, "Yeah. We never rule anything out that's in the best interest of shareholders, employees, customers."


Yeah, shareholders first, employees second.
 

Marko Ramius

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Same story at pretty much all of the established carriers, yet what are the odds us 'dumb' pilots in aggregate notice the lock step moves and realize that it's not coincidental?
 
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