American Airlines (search) is reducing some flights and considering charging for onboard food amid increasing fuel prices and intensifying competition from low-cost carriers, the company's chairman and chief executive said Thursday.

Gerard Arpey's comments to financial analysts in New York came one day after American's parent, AMR Corp. (AMR), said it was discussing refinancing an $834 million line of credit. AMR said in a filing with the Securities and Exchange Commission (search) that it needs additional relief since August revenues fell short of expectations.

The disclosure further worried analysts already uncertain about American's outlook.

J.P. Morgan analyst Jamie Baker predicted that AMR would lose $1.70 per share — about $270 million — in the third quarter, instead of the 30 cents per share that he had previously forecast. Until Friday, Baker had been more optimistic than his counterparts — the consensus prediction of 10 analysts surveyed by Thomson First Call was a third-quarter loss of 50 cents per share.

Similar concerns prompted Merrill Lynch analyst Michael Linenberg to lower his ratings on Continental, Delta and Air Tran airlines, citing concern about overcapacity on their East Coast routes. He maintained "buy" ratings on Southwest Airlines Co. (LUV) and JetBlue Airways (JBLU), saying that the two low-cost carriers could capitalize on the problems of older carriers.

AMR shares were down 28 cents, or 3.2 percent, at $8.46, in midday trading Thursday on the New York Stock Exchange (search).

Finances for AMR, which avoided bankruptcy last spring and reduced its annual costs by $4 billion, remain fragile.

Arpey said Thursday that American Airlines is making cautious plans for 2005, including reducing some midweek and Saturday night flights at its Miami and Dallas hubs respectively. He said American is considering new sources of revenue, including charging for onboard food and renting portable entertainment systems.

American, in response to high fuel prices, raised its fares $5 each way on Wednesday in another attempt to pass costs along to travelers. But major carriers' earlier attempts to raise fares have failed. Other carriers are still considering matching the latest increase.

In its SEC filing Wednesday, Fort Worth-based American also said that its total debt load exceeds $22 billion, including aircraft leases, and it must increase profit to service that debt.

AMR's cash balance of $3.6 billion meets the minimum required under its existing credit line, the airline said. But its financial results won't meet a provision in its loan agreement regarding the ratio of its pretax earnings to debt payments.

AMR now wants to refinance or replace the loan.

In the filing, the company also said September revenue will be hurt even more by the series of strong storms that hit Florida and the Gulf Coast.