American Airlines Has No Plans To Cut More Capacity

February 3, 2009

American Airlines said on Tuesday it was holding off from any further capacity cuts despite "disappointing" forward bookings, easing months of gloom in a sector hit by weak traffic and the economic downturn.

"Our advance bookings are down from where they were this time last year despite the capacity cuts, so that's disappointing, but not at this point so alarming that we are cutting more capacity," chief executive Gerard Arpey said.

"But we are clearly watching carefully," he told journalists at a meeting of the oneworld airline alliance in Madrid.

American Airlines' parent AMR last month posted wider quarterly losses and warned that the economic slowdown in 2008 would likely continue this year, causing larger-than-expected job and route cuts.

Arpey's comments came as Lufthansa, a leading member of the rival Star Alliance, delivered a surprise increase in its profit forecast, lifting sector shares.

It raised its forecast for full-year 2008 operating profit, becoming the second European airline (after Ryanair) in as many days to say it could defy the tough industry environment.

Looking ahead, however, Lufthansa said it anticipated higher than usual risks as demand remained weak.

Lufthansa shares rose more than 5 percent.

By contrast, Japan Airlines (JAL) said in Madrid it was considering cutting 10 percent of international capacity and 2-3 percent from domestic flights in the coming fiscal year to adjust to weaker demand.

American's Arpey said he was optimistic the US carrier would receive anti-trust immunity in the US for its alliance with British Airways and Iberia as soon as the early summer.

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