American Airlines seeks business cost reductions Airlines have been hard hit by soaring energy prices over the past decade, with profit margins rapidly declining amid the surging cost of oil. One major carrier is hoping to achieve business cost reductions and augment its profit margins through a series of soon-to-be implemented measures.

American Airlines officials said this week the tepid global economic climate, coupled with exceptionally high fuel costs have prompted the company to embark upon a major cost-cutting campaign in an effort to increase future earnings and streamline its current operations.

Companies across the globe have endeavored to overhaul their strategic sourcing of oil, but a number of geopolitical factors coalesced to effectively spur price fluctuations this year. The ongoing conflict in Libya, for example, has contributed to higher oil prices, as the North African nation is responsible for more than 1.5 percent of total worldwide oil production.

The Los Angeles Times reports American Airlines will cut overall capacity and retire 11 older aircraft on its quest to increase profit margins. The planes will be decommissioned next year, company officials said.

Increased competition from other carriers prompted the changes to its flight plans, analysts asserted. The U.S.-based carrier said it would cancel some of its unprofitable routes on its quest for higher earnings. Company officials said they planned to reduce overall capacity by roughly 3 percent.

Moreover, AA officials said an inordinate number of pilots retired this year, diminishing its ability to effectively staff some of its flights.

"While our advance bookings are generally in line with last year, we are taking these additional steps in light of the uncertain economic environment, ongoing high fuel costs and to ensure we run a reliable schedule for our customers given additional pilot retirements we anticipate throughout the fourth quarter," AA chief commercial officer Virasb Vahidi said.

Other airlines have announced similar cuts over the course of this year. Shocks to the global economy have posed significant problems for airlines, experts say. Critics, however, charge airlines are failing to prepare for volatile energy prices, which they contend are now the norm.

AA officials said the company is also awaiting the delivery of more than 460 new energy efficient airplane models, which will help to replace the 11 Boeings.

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