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Thu, Feb 21, 2008

American Scales Back Its Growth Plans For 2008

Now Forecasts Only A .02 Percent Increase In Capacity

One day after oil prices closed over $100 barrel for the first time in history, the world's largest airline announced it has cut its planned capacity growth to practically nil for 2008.

According to The Dallas Morning News, American Airlines parent company AMR now predicts only a .02 percent growth in the number its available seats in 2008, down from its earlier prediction -- made just last month -- of a one percent growth rate for the year.

Following Wednesday's announcement, AMR spokesman Andy Backover said the reduction was due to a number of factors, not just fuel prices. Backover also cited recent pilot retirements as reason for the cutdown, as well as uncertainty in the future economic climate.

As ANN reported, 143 American pilots retired on February 1, opting to leave the airline early in order to lock in the value of their retirement plans, linked to the airline's stock price. The day before, the carrier opted to proactively cancel several flights for the month, in anticipation of the move.

American also faces protracted contract talks with its pilot ranks in 2008, as the Allied Pilots Association works to recoup losses pilots had to take over the past several years to keep American out of Chapter 11. Those talks actually began last year, but have seen little progress to date -- only a lot of rhetoric.

AMR shares fell 19 cents Wednesday, to $14.73.

FMI: www.aa.com, www.alliedpilots.org

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