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STEMMING THE TIDE OF LOSSES

American to charge for first checked bag; slash domestic capacity at least 11 percent
By Tom Stieghorst | Sun-Sentinel.com
11:01 AM EDT, May 21, 2008
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Digg Del.icio.us Facebook Fark Google Newsvine Reddit Yahoo Print Reprints Post comment Text size: FORT WORTH, Texas - American Airlines on Wednesday became the first major airline to charge passengers for checking even one bag.

The Dallas-based carrier will implement a $15 each way charge on the first checked bag effective June 15, and will raise several other passenger fees in an attempt to stem losses from the soaring cost of fuel.

American also announced it will cut flight capacity in its domestic market by 11 percent in the fourth quarter, up from 4.6 percent previously planned. The cuts will lead to the retirement of 40 to 45 full-sized jets and 35 to 40 regional jets.

To date, only smaller airlines such as Spirit Airlines and Allegiant Air have charged passengers for the first checked bag, although most airlines now have fees for a second checked bag. Now that American has broken the barrier, other large airlines will likely follow.

American said the higher fees are expected to raise hundreds of millions of dollars in new revenue.

"The bottom line is that our revenues, which include ticket sales and fees, must keep pace with our increasing costs," American chairman Gerard Arpey said in a statement.

By nine inch nails on May 21, 2008, 09:13 in Friendly Talkzone.

nine inch nails says on May 21, 2008, 09:16:

I was pretty surprised when I just saw this but understand they have to do what they have to do with ever increasing fuel costs.

"They know nothing, they know nothing." J. Cramer

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Waterdawg says on May 21, 2008, 09:22:

There is the old joke " How to become a millionaire ? Be a billionaire and buy an Airline " !

The whole industry is a mismanaged heard of cattle. ( Fuel costs aside ) .. AA happens to be one of the worst .. Unfortunatly I have to fly them ( AA ) the end of the month Dallas/Salt Lake ( fingers crossed )

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sanandressi says on May 21, 2008, 11:26:

Unfortunately, passengers have been enjoying cheap low fares for about 15 years and with fuel costs now at a record, the industry is reacting. How much are you paying at the pump for a gallon of fuel? Why would your airline fare stay the same if the price rises at the pump?

Airlines have lost revenue because the rich and wealthy who used to fly in first class are now on private jets. Also, these so callled low cost carriers, forced the so called legacy carriers to cut costs so you lost your meals and peanuts and pillows. Low cost carriers had lower costs, wages and benefits especially. So legacy carriers, like AA, have had to cut costs. Avianca, for example, pays their employees a fractionn of what a US carrier does but they were bankrupt too a few years ago. I think both Avianca and Aerorepublica/Copa have added a fuel surcharge as well.

Airlines are a business just like anything else and if this oil thing does not stabilize then then will be more pain. You pay more for a gallon of gas and so the airline has to pay more for their jet fuel. You want lower fares so they take your meal away but you pay at McDonald''s (or wimpy) in the airport.

I like American Airlines by the way! I fly AA!

There will be a lot of volatility in airlines, at least here in the US, unless regulation by government ever comes back. Carriers will fall away and new ones will start up. Get used to the idea!

BTW If China and India are using more fuel than ever than ask yourself where the investment in China and India came from? American citizens running multi-national corporations who have no loyality to the United States. I know that there are others in this forum who are Europeans. How much of Europe's wealth is now invested in China and India because we are not investing in anythinng here in America over the last 40 years when we were the industrial power of the world at one point. It is what it is!

Support Plan Colombia, re-elect ilena Ros-Lehtinen

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BillBigD says on May 21, 2008, 13:25:

It is only going to get worse. British airlines said today they will spent more than $2b more in fuel this year than last and this is with 60% of the fuel hedge at $85.
Champion Airlines filed yesterday ( regional airline flys to Mexico and flys two basketball teams)
Airtran has a book value of just $300m
The only one in decent shape is Southwest and they don't fly international.
Airlines are fun to short on any spike up. Instant $ maker.
AA- Also fly a lot as I am in Dallas/ Miami. Planes are getting in rough shape IMO

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nine inch nails says on May 21, 2008, 13:28:

"How much are you paying at the pump for a gallon of fuel?"

Last night $4.11/gallon for premium and that is $.10 cheaper than most.

U.S. at least still has lower cost than U.K. or Euro but more and more people driving less and switching to smaller cars.

"They know nothing, they know nothing." J. Cramer

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sanandressi says on May 21, 2008, 14:31:

Yes, we Americans are paying more because our industrialists and bankers decided to invest over there instead of over here. Microsoft can invest $2BN in India and GM is building a second car plant in China. GE is building 9 nuclear plants in China. Enjoy your Chinese Olympics this summer. You paid for it!

China and India are using more energy and Chavez would rather sell the oil to them instead of the US. Mexico refuses foreign investment in PEMEX and Nancy Pelosi annd DEMS will not allow drilling off Florida, CA and ANWR.

More demand drives up the price....Chinese and Indian demand.

However, higher prices mean that alternatives may be coming..finally....goodbye ARAB oil!

Support Plan Colombia, re-elect ilena Ros-Lehtinen

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sloopskipper says on May 21, 2008, 18:04:

You can't blame it all on bankers and industrialists.

I can distinctly remember gas lines and alternate day gas purchases, and we started driving Falcons, Pintos and Corvairs.

And, now? Explorers, Expeditions, and Hummers, often to drive more than a hundred miles to work, from huge homes, financed with mortgages that they can not afford.

You can not pay brain surgeon wages to guys putting wheel covers on Buicks, while guaranteeing life long pensions and healthcare. The jobs are just not worth it.

Therefore the jobs go where people will do the same job, and better, for much less.

Greedy American workers and their unions (who justify their continued existence by simply demanding more, and more) can share much of the blame for the current situation..

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bufalo says on May 21, 2008, 18:12:

sloopskipper - wow, true. I think of all the people who bought those HUGE car/trucks as I left a few years back, wonder how much they're paying now for gas. I don't even want to go back to the states for economic reasons.

"If you don't like it - lump it, take it down the road and dump it." - Archie Bunker played by Carroll O'Connor

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sloopskipper says on May 21, 2008, 18:19:

I recently bought a Korean Samsung refrigerator and it seems to be a far better product than anything I ever had from Frigidaire, Amana, or any other American manufacturer. Everything fits, and I can not even hear the compressor running (it does not hum, vibrate, or rattle). BUT, it keeps everything cold (or frozen) so I guess it does run (sorta like my Swedish gas refrigerator in my camper in the U.S, but this one is electric).

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sloopskipper says on May 21, 2008, 18:24:

bufalo says on May 21, 2008, 18:12: flag

"sloopskipper - wow, true. I think of all the people who bought those HUGE car/trucks as I left a few years back, wonder how much they're paying now for gas. I don't even want to go back to the states for economic reasons."

What can I say? What comes around, goes around?

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angelitabogota says on May 21, 2008, 18:34:

"How much are you paying at the pump for a gallon of fuel?"

"Last night $4.11/gallon for premium and that is $.10 cheaper than most"

You guys complain about the price of gas in USA? One gallon of normal gas, not premium in Bogota costs 7.011 COP which is 3,9233 dollars. And we colombians earn much less money per hour than in USA...I guess we are f...

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sloopskipper says on May 21, 2008, 22:44:

The last I bought in Panamá was $4.05 (about a week ago) for 91 octane, and my Jeep only needs 89, but you can't buy it here.

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bufalo says on May 22, 2008, 07:09:

$4.05. Holy smokes when I left the US I could still buy a gallon of regular for $1.00 just over the bridge in Jersey. No way I'm buying a car when I get back.

"If you don't like it - lump it, take it down the road and dump it." - Archie Bunker played by Carroll O'Connor

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sloopskipper says on May 22, 2008, 14:01:

You must have been gone a LONG time!

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bufalo says on May 22, 2008, 20:29:

about 6 years or so... living away anyhow, visited from time to time.

"If you don't like it - lump it, take it down the road and dump it." - Archie Bunker played by Carroll O'Connor

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dwmte7 says on May 24, 2008, 08:01:

will miracles never cease??? a thread without hostility, nit picking? fantastic.

dwmte

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