American to charge for first checked bag

FORT WORTH, Texas – American Airlines will start charging $15 for the first checked bag, cut domestic flights and lay off possibly thousands of workers as it grapples with record-high fuel prices.

American plans to cut domestic flight capacity by 11 percent to 12 percent in the fourth quarter after the peak summer season is over. That’s more than double American’s previous plans to cut flying by 4.6 percent in late 2008.

In a further sign of the problems facing the industry, Southwest Airlines Co., the most consistently profitable U.S. carrier, won’t earn as much the rest of this year as it did in the same period of 2007, Chief Executive Gary Kelly said.

American, the nation’s largest carrier, said Wednesday the fee for the first checked bag starts June 15 and that it would raise other fees for services ranging from reservation help to oversized bags. The other fees will mostly range from $5 to $50 per service, the airline said.

Last month American announced it would join other carriers in charging $25 for second bags checked for some passengers, but it wasn’t immediately clear how Wednesday’s announcement would affect that.

Its proposed fee for a first checked bag would exempt people who belong to elite levels of its frequent flyer programs, those who bought full-fare tickets and those traveling overseas.

Delta Air Lines Inc. spokeswoman Betsy Talton said the Atlanta-based airline has no current plans to match American’s fee for the first checked bag, but is considering all options.

Chairman and Chief Executive Gerard J. Arpey said he expects the new or raised fees will raise several hundred million dollars for American.

The changes were being made to adapt to “the current reality of slow economic growth and high oil prices,” Arpey said.

Arpey didn’t put a figure on the layoffs, but when asked whether he expected the figure to be in the thousands, he said yes.

Arpey said he wants to cut costs about 7 to 8 percent.

American Airlines expects to retire 45 to 50 planes, most of them gas-guzzling MD-80 aircraft. AMR regional airline American Eagle also plans to retire planes.

American said rising oil prices have increased its expected annual fuel costs by nearly $3 billion since the start of the year.