American Airlines plans to park about 10 percent of its MD-80 fleet this year and trim domestic capacity to stem losses from sky-high fuel prices.
Texas-based American announced Wednesday that it would ground at least 25 MD-80s, aging workhorses that carry out much of its domestic service and gradually replace them with newer and more fuel-efficient Boeing 737 jets.
American joins Delta and United airlines in cutting money-losing flights in the U.S., while boosting flights on higher-margin overseas routes, as jet fuel prices hit the stratosphere.
Their retreat in the domestic market creates a void that lower-cost carriers such as Southwest, JetBlue Airways and Virgin America will likely fill, said airline analyst Roger King of CreditSights Inc.
Despite raising fares more than a half-dozen times since the year began, carriers such as American are struggling to offset soaring fuel bills.
Airlines paid $140 per barrel for jet fuel, as of April 15, up 45 percent from year-earlier prices, according to the International Air Transport Association, an airline trade group.
“There is no denying that should fuel prices remain where they are, we are headed for yet another challenging year,” American Chief Executive Gerard Arpey told employees in a letter Wednesday.
American started the year off with a quarterly net loss of $436 million, or $1.31 per share, that exceeded analysts’ expectations of a $1.32 per share loss. American’s performance was an improvement from its year-earlier loss of $505 million, or $1.52 per share.
The nation’s third-largest carrier continues to look to close ventures with OneWorld alliance partners across the Atlantic and Pacific to boost revenue. American said it intended to take delivery of two additional Boeing 777-300ERs, bringing to five the total new wide-body jets it will add to its fleet in 2012 and 2013 as it increases overseas service.
The latest network tweaks will reduce American’s U.S. service by 0.5 percent for the year, while boosting international capacity by 8.1 percent for the year.
Delta last month said it would cut overall capacity by 3 percent, while United said it intended to keep system-wide capacity flat while making large domestic cuts.
Chicago-based United told employees last month that while it would increase overseas capacity by 2.5 percent to 3.5 percent for the year, it would reduce domestic service by 1.5 percent to 2.5 percent for the year with the deepest cuts in the fourth quarter. During that period, United intends to reduce domestic flying by 5 percent and is studying parking some fuel-inefficient jets.