American Air CEO Says Adding Back Service

American Airlines Chief Executive Donald Carty has said the world's largest airline will begin to restore some of the capacity cut after the Sept. 11 attacks starting this week.

American, a unit of AMR Corp. , like other airlines cut out about a fifth of its schedule after the attacks on New York and Washington dampened the demand for air travel and caused huge, ongoing losses for most carriers.

It grounded about 20 percent of its capacity, measured by available seat miles, in line with most other major carriers with the notable exception of Southwest Airlines Co.

Some Wall Street analysts have said airlines' ability to keep those cuts in place will be key to turning profits as demand recovers. If fewer seats are available, then airlines can raise fares to higher levels.

However, Carty's comments, made in a recorded message to employees at the end of last week, indicate that American, at least, will be restoring at least part of what it cut out.

An airline spokesman was not immediately available to comment on how much capacity is being put back, or where.

Some airlines grounded planes altogether and others simply used them less frequently. Many planes are now parked in the desert.

And when one airline starts adding back flights, others may be forced to follow or lose competitive ground.


"A key element of our recovery plan is the rebuilding of our network," Carty said in the message. "We will begin adding some capacity back into the system next week, Jan. 31, at our hubs in some of our big cities. We'll also add another layer of new service in the March schedule.

"And, unless the economy dips south, we'll add more in April. This is part of our strategy to gradually and thoughtfully restore the capacity as we see demand start to grow, especially among business travelers."

He said the airline was still losing "lots of money every day, but's certainly less than it was before."

Last week, after reporting a record loss of nearly $800 million in the fourth quarter, Chief Financial Officer Thomas Horton said AMR, based in Fort Worth and also parent of TWA, was burning through about $6 million in cash per day in December. The airline expects to generate cash in the second or third quarter.

"Our plan is to systematically rebuild our network so that we can get into a position to recall our furloughed people and, eventually, restore ourselves to profitability," Carty added. "But that's not going to happen overnight."


Carty also said that the airline's operations since new bag screening rules were required nationwide were running very smoothly. Over the first weekend, which included the Martin Luther King holiday, he said only 2 percent of operations were delayed, with an average length of 12 minutes.