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Carrier cuts fares and legroom
http://www.sina.com.cn 2003/05/23 11:25  Shanghai Daily

  American Airlines, fighting back from the brink of bankruptcy, announced a turnaround plan that includes adding more seats to many planes and limiting fares on a few routes.

  New Chief Executive Gerard Arpey said the moves - along with US billion annual cost cuts - would help return American to profitability, although he declined to say when. American lost US billion in the first quarter.

  Arpey, who took the controls of the world's largest carrier last month, announced the turnaround campaign at the company's annual shareholders meeting on Wednesday. Investors and employees gave Arpey a cordial reception, but some said American needs bigger changes to reverse more than US.2 billion in losses since the beginning of 2001.

  Employees also called for more disclosure and shareholder approval of compensation and severance packages for top executives.

  Arpey said he would decline a pay raise tied to his pro-motion, and Chairman Ed-ward Brennan said he would forgo his salary. Brennan also suggested that American might not pay severance to former CEO Donald J. Carty, who quit under fire after delaying disclosure of bonuses and pension perks for senior executives.

  American is still in danger of filing for bankruptcy, officials have told regulators, but Arpey said the company's finances were boosted this month by US million in federal aid to airlines.

  The company had US.3 billion in unrestricted cash as of March 31. Arpey said he would not update the company's cash position until the end of June.

  Arpey was encouraged by an uptick in June bookings, which he said were stronger than last year.

  There will be fewer seats for those travelers: American's capacity this summer will fall 6 percent from a year ago - 10 percent on domestic routes. By next summer, Ar-pey said, American's capacity will be 15 percent lower than that in summer 2001, before the terrorist attacks.

  Adding seats to planes marked a retreat from one of Carty's major initiatives. American launched the "More Legroom in Coach" promotion in 2000 to lure high-paying business travelers by removing seats from all planes.

  But business traffic dropped during 2001, and American was left with less capacity than rivals flying the same jets.

  American will add back 12 coach seats to all 140 of its Boeing 757s and 16 seats to its fleet of 34 Airbus A300s.




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