Jun. 12--American Airlines said Thursday that it plans to cut more flights in its fall schedule, a move that will cost nearly 1,600 jobs at the Fort Worth-based carrier.
Delta Air Lines also said it will shave additional capacity this year, which likewise could mean further job cuts at the world's largest airline operator. And Southwest Airlines CEO Gary Kelly, speaking at the same investment conference in New York City, said summer travel demand remains weak, despite fare sales.
AMR Chief Executive Gerard Arpey told investors and analysts at the Bank of America/Merrill Lynch Global Transportation Conference that American's advanced bookings through August were down 2 percent domestically and internationally. He called that performance alarming.
"The cuts we implemented last year were helpful, and as a result we did not make major changes to our summer schedule. But looking forward, we think an adjustment to our fall schedule is warranted," Arpey said. He said the flight cuts will take effect in late August.
At Dallas/Fort Worth Airport, there will be 19 fewer American and American Eagle daily flights, with a total of 749 flights each day. With the additional flight cuts, Arpey said that systemwide capacity this fall will be 7.5 percent less than the same time last year.
In a note to employees, AMR said its own capacity cuts will affect 1,200 flight service jobs, 300 airport service positions, 50 cargo jobs and 40 positions at American's maintenance base in Kansas City, Mo., where those job reductions had been previously announced.
"We are still analyzing the full impact of these capacity cuts on jobs, and could see further reductions later," the employee letter said.
In addition to the capacity cuts, Arpey said American plans to order eight more Boeing 737-800 jets that it had previously announced. With the new order, American expects to have 84 of the new planes in 2009 and 2010, replacing its aging MD-80 airplanes. The average age of American's airline fleet is about 15 years, Arpey said. The company also expects to get its first 787 jets from Boeing in 2013.
Airlines are facing rising fuel costs this summer and continued weak demand for travel, executives told the conference.
Southwest's Kelly said, "The first part of June doesn't show any improvement at all," adding that June's revenue for the Dallas-based airline will be down more than May's number.
Last week, the carrier said revenue dropped about 9 percent in May compared with the same month in 2008.
In response, Southwest plans to shrink capacity by about 6 percent for all of 2009. Reductions so far this year have been smaller than that, suggesting that deeper cuts are ahead.
"I don't think there is any real reason to argue that things are going to get better," Kelly said, referring to the economy and weak business travel demand.
Kelly said the company will delay its international code-sharing agreement with WestJet, a Canadian low-cost carrier, until next year. He said jet fuel costs in the second quarter will average about $1.80 per gallon.
Delta CEO Ed Bastian said that if fuel prices continue to climb into the fall, airlines will be under pressure to raise prices or cut more capacity to cover costs. He said Delta has made a decision not to "put seats out into the marketplace if we can't recover the cost of that seat."
Delta, which acquired Northwest in October, has shed thousands of jobs over the last year in connection with previously announced capacity reductions.
Houston-based Continental Airlines is pressing its corporate customers to step up their travel, Chief Executive Larry Kellner told the conference.
"We're working our business [traveler] side very hard because clearly this is where we could also see a recovery much quicker if we could get the business traffic back on the airplanes," he said.
Adjustment to fall schedule warranted, officials say
With airlines slashing flights in response to high fuel costs and bankruptcy filings, the beginning of a long-anticipated reduction in airline capacity may have finally arrived.