American Airlines CEO says things looking up

By David Koenig
Associated Press

FORT WORTH, Texas — The new chief executive of American Airlines says lower costs for labor and fuel are helping the ailing carrier, although he believes higher fares are also key to any recovery.

Gerard Arpey added that the world's largest airline has seen an increase in bookings lately, but he repeatedly warned that American, which narrowly avoided bankruptcy several times in the past two months, is not out of the woods yet.

Arpey said yesterday it will be easier for major U.S. carriers to raise ticket prices now that they have reduced the supply of available seats.

In his first two weeks since taking the helm of American and its parent, AMR Corp., Arpey has spoken to several employee meetings and huddled with senior managers to ponder strategy. Arpey's message to employees was to put battles with management behind them, including the acrimonious fight over $1.8 billion in annual concessions, and pull together for the good of the company. His message to other executives: find similar savings from suppliers and aircraft lessors.

AMR lost $1 billion in the first three months of this year and ended the quarter with $1.3 billion in cash. Officials have said AMR needs about $1 billion in cash to avoid bankruptcy. "Our future is uncertain," Arpey said. "However, just in the past two weeks, there are some positive signs for our company and our industry."

Pay cuts and efficiency changes under last month's labor deals took effect May 1, and combined with a payment expected this month from a government relief fund for the airline industry, Arpey said the carrier will be able to meet debt payments due in June.