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American grounds old jets
August 20, 2001: 4:25 p.m. ET

Fall in demand leads to 1 percent capacity cut at world's largest airline
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NEW YORK (CNNfn) - American Airlines will accelerate its retirement of some of its older jets due to declining demand for air travel.

The airline, which will be the world's largest when it completes the integration of recently acquired Trans World Airlines, will cut the capacity of its combined fleet by nearly 1 percent next year due to taking the various aircraft out of service.

The airline industry has been hit by losses and declining fares the last six months as demand for business travel has dropped dramatically.

American, a unit of AMR Corp. (AMR: Research, Estimates), said it will take five Boeing 727 jets out of service in the last quarter of this year and the first quarter of next year, rather than in 2003, as originally planned. The 727 is an older narrow-body jet not made since 1984. In addition it will stop flying its four remaining MD-11 wide-body jets, which are also no longer produced, by Nov. 1, rather than closer to the end of this year as originally planned.

This marks the third time since the acquisition of TWA was approved in April that the airline has announced it would cut the size of its older fleet.

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"This action is consistent with similar steps American has taken during recent months to better align capacity with lower demand," said a statement from Tom Horton, American's chief financial officer. "This is a very difficult time in the airline business, and we see no near-term improvement. We will continue to evaluate further cuts in capacity and capital spending as conditions warrant." graphic


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AMR Corp.

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