American Airlines (AMR) CEO, Gerard Arpey, did not mince words this morning when explaining why AMR is slashing capacity 11%:
The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy.
AMR also plans to retire 40-45 planes. AMR will also start charging $15 for the first checked bag, effective on tickets purchased on or after June 15.
We think the spike in oil prices will lead to the usual wave of airline bankruptcies. Interesting to hear the CEO of the country’s largest airline essentially agree.