As fuel prices orbit higher, American Airlines announces job cuts

22 May 2008

The world's largest carrier, American Airlines (AA), announced drastic steps Wednesday to "remain viable," even as oil prices surged dramatically to new highs. Emergency steps announced by American include new fees for all checked baggage, lesser domestic flights and laying off thousands of workers.

American announced these measures even as the price of oil jumped Wednesday to $133.17 a barrel, up a remarkable $4.19.

American said it intends to scrap 75 planes and also reduce the number of seats available on domestic routes by between 11-12% this year. It did not specify the number of jobs that will be lost from its 85,000-strong payroll as it closes and merges its facilities.

The aircraft to be retired will largely be regional jets, which burn more fuel per passenger than larger planes. Transatlantic services, which bring in more profits, are unlikely to be downgraded in any way.

Under the new rules, most American passengers will have to pay $15 for checking a single bag, starting  starting 15 June. The fresh charge comes on the back of an earlier decision, announced just two weeks ago, to charge $25 for a second bag.

American justified these moves as a compulsion forced on it by an "extraordinary" environment.