Gordon Werner

Wednesday December 19, 5:12 pm Eastern Time

American Air Costs Rising, Fleet Shrinking

FORT WORTH (Reuters) - AMR Corp., parent of American Airlines, said on Wednesday its unit costs for the fourth quarter will be somewhat higher than expected and its American Airlines fleet will shrink in 2002 by 24 jets to 688.

AMR, in a regulatory filing with the Securities and Exchange Commission, pegged costs per available seat mile at the parent company, which includes information from the TWA airline acquired this year, at 11.9 cents for the fourth quarter. For American Airlines' mainline operations alone, the unit cost is forecast at 11.5 cents per available seat mile.

Traffic for the fourth quarter on American's mainline operations is estimated down 21.2 percent on a year-over-year basis on a 14.1 percent drop in capacity, according to the filing. That reflects an estimated traffic decline of 15.3 percent decline at American in December, the airline said, an improvement over the actual 19.8 percent drop in November and the 27.9 percent decline in October.

For the American Airlines fleet, 3 Boeing 777s will be added in 2002 along with 6 Boeing 757s. Being retired are another 33 Boeing 727s, leaving the total fleet on hand at the end of the 2002 at 688.

The combined fleet including TWA planes will drop to 854 jets at the end of 2002 from 881 at the end of this year.