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Exec: AA capacity cuts are temporary.

Article Excerpt
American Airlines is one of only two Big Six legacy U.S. carriers, along with Continental, not in or recently clear of bankruptcy reorganization. BTN editors last week spoke with AA executive vice president Dan Garton about the carrier's competition against bankrupt and low-cost competitors, adjustments to flight schedules, business travel demand and international developments.

BTN: Industry capacity finally is starting to come out of the system. Beyond previously announced schedule reductions, what is American's strategy?

Dan Garton: Considering fuel prices, the routes that used to be on the edge have fallen off. It is responsible management to look through the route structure to see which are cash-negative. Fuel is now our biggest expense. I have been here 20 years and it had never been so. It had always been salaries. These fuel adjustments are probably temporary in nature, but changes by airlines that are restructuring are probably permanent. I do expect Northwest and Delta to make capacity adjustments that are permanent.

BTN: Will additional cuts generally come from reducing frequencies or suspending routes?

Garton: It will be driven by economic evaluation. If you are in a high-frequency market, you can recapture a substantial amount of the revenue that you would otherwise lose by...

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