Company Watch - American Airlines.

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American hopes for savings at maintenance base. American Airlines hopes to achieve $400 million in annual savings at its Alliance Airport maintenance base by 2008. Company and union officials worked together on the plan, which involves a combination of cost cuts and money from outside contracts.

May 12, 2006

American Airlines Chairman and CEO Gerard Arpey said the carrier needs at least $1 billion in additional annual savings to keep pace with rivals restructuring through bankruptcy and "just to keep even with our costs last year," and has evaluated replacing the JT8D-200 engines on its MD-80 fleet to save fuel. Speaking at the Bear Stearns Global Transportation Conference, available via webcast, Arpey said rivals United Airlines, Northwest Airlines, Delta Air Lines and US Airways "leveraged marketplace failure to reduce their costs." As a result, billions in annual savings achieved by AA in recent years are not sufficient. "We now find ourselves with relatively high costs among our peers. Each additional dollar of savings becomes harder to come by but we are looking under every rock." May 11, 2006

American mulls replacing MD-80 engines to lower costs. American Airlines is considering replacing the engines on its MD-80 jetliners with more fuel-efficient models, a move that could eventually save millions in fuel expenses. May 11, 2006

American's first-quarter operating expenses increased 10.6% to $5.23 billion, driven by a 34.3% hike in fuel costs. Arpey said the "enormous fuel burden" is taking a toll. "The airline industry is going to have to figure out how to take that cost and get somebody else to pay for it or we're not going to be in business." AA is exploring replacing engines on its MD-80s with more fuel-efficient models. "The MD-80 is [powered by] Pratt & Whitney engines and they do burn more fuel than current-generation engines...We have not been able to come up with an engine replacement that makes both technical and economic sense as we stand here now." AA's MD-80 fleet totals 361 aircraft of which 34 are in storage, according to Airclaims. May 11, 2006

American increases leisure fares as fuel costs soar. American Airlines raised prices on leisure fares $5 each way. The fare increase will help cover high fuel prices. May 9, 2006

American, CBS renew, expand agreement. American Airlines and CBS have renewed a partnership allowing CBS to show its programs on American's flights. Additionally, CBS will take over advertising sales related to the in-flight programming. May 10, 2006