NEW YORK (CNN/Money) - The head of American Airlines' parent company says the world's largest airline company will need less employees to operate in the future, although he anticipates attrition and voluntary separation programs will be able to take care of most of the needed job cuts.

Donald Carty, CEO of AMR Corp. (AMR: down $0.31 to $14.60, Research, Estimates), in a recorded message to employees, also warned that lower-cost, low price carriers such as Southwest Airlines, have captured more of the key business travelers and that will hamper the recovery of the major, higher-cost carriers.

"What's becoming very clear is the condition of big carriers like American is not going to suddenly improve when the economy gets better," he said.

Carty said the current fare structure is not sustainable, but dismissed the proposals at other carriers for pay cuts, government guaranteed loans or what he called the threat of "slash and burn layoffs." But he said that two teams of American employees are looking at ways to cut costs and to restructure the business, changes that he said, "will no doubt mean that over time we'll need fewer people to operate the airline."

He gave no time frame for the reduction in staff size, although he said changes would not be accomplished overnight.

"In two years I think we'll wake up, look back and see just how far we've come," he said.

He did not rule out involuntary layoffs, but said he hoped to accomplish many of the cuts through retirements, normal turnover and some voluntary departures.

The company announced 20,000 job cuts, or about 14 percent of its staff, last September as it cut its schedule of flights by about 20 percent in the immediate wake of the terrorist attacks. It has recalled some of those employees as it increased its number of flights since then, but it could not give a precise number early Wednesday.

Carty compared the airline industry to the retail industry, where lower-priced Wal-Mart has helped force many old established retailers out of business.

"Consumers are telling big airlines that they really, really like us, but they can't or won't pay extra for the convenience and amenities that we offer. They'll fly the industry Wal-Mart's-of-the-air instead," he said.

"We think there are some clear differences between the full-service and low-cost carriers, between us and the Wal-Marts, if you like," he added. "And, many of those are product features that the traditional business traveler wants. But, it is also clear that we are going to have to find ways to either change our product or deliver it at a much lower cost than we incur today -- and that means dramatic change."

But while he said there would be cost cuts and changes in the business, he also vowed, "We won't be 'Wal-Marting' American Airlines. There are elements of our full-service airline that have tremendous value."