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AA Remains Optimistic Despite Capacity Cuts

June 12, 2009 By: George Dooley

AMR Corp., parent of American Airlines, plans to reduce mainline seating capacity by 7.5 percent in 2009 versus 2008, compared to previous expectations for a 6.5 percent year-over-year decline, Chairman and CEO Gerard Arpey said at the Bank of America-Merrill Lynch 2009 Global Transportation Conference in New York.

Arpey said the additional reductions represent a decline in mainline capacity for the second half of the year of approximately 7.5 percent and international capacity to 5.5 percent compared to the second half of 2008.

Arpey noted that AA will closely monitor demand trends and will remain responsible and disciplined in trying to keep supply and demand in reasonable balance, while preserving the competitive strength and revenue-generating power of AA’s global network.

He cited American's efforts to strengthen its global reach by building a presence in China and India, and by expanding its reach into new markets, such as Barcelona and Milan. Arpey also said he is enthusiastic about the progress the oneworld Alliance, of which American is a founding member. He said he remains optimistic that American's antitrust immunity application with British Airways, Iberia, Finnair, Malev and Royal Jordanian Airlines will be approved by year's end.

In addition, Arpey noted that AA continues to make prudent investments in its fleet and facilities, such as modifications to its 767-200 aircraft, a reconfiguration of 757s for international use and upgrades to Admirals Clubs in Boston, Washington Dulles, and London Heathrow.

American also continues to deliver improved results in dependability and customer experience, according to Arpey. "Being able to deliver what our customers value most, across such a broad spectrum of wants and needs, is challenging," he said. "All told, our overall customer satisfaction scores reflect excellent progress on virtually every front we measure in trying to hit that outcome."

While significant hurdles remain in the near term, Arpey said AA must remain focused on its long-term strategy. "We are not sugarcoating the magnitude of what we - along with every other airline - are up against today in this economic climate," he told the conference. "Just the opposite. Our confidence also stems from our long list of competitive strengths, our proven resilience, and the fact that despite formidable obstacles, we are executing well on a number of fronts today. We are running an airline our customers can depend on, delivering the products and services they value, and building a fleet and a network and a partnership grouping that will serve our customers and our company well for many years to come.”


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