Gerard Arpey American Quotations

These are times of unprecedented challenge and change in the airline industry, and the appointments we are announcing today will put American in an even stronger position to continue the substantial progress that has already been made under the tenets of our Turnaround Plan.

First, we have to lower our costs to levels that are more competitive. This will prevent the lower-cost airlines from pushing us out of the markets we want to serve. We've made great progress on this front, but we need to keep pushing.

Our Fly Smart philosophy is about investing only on those points of differentiation that pay for themselves, that earn a revenue premium commensurate with what it costs us to provide that product or service.

But I definitely see us playing a major role in St. Louis in the years to come. We already provide service to 95 percent of the markets St. Louis travelers visit the most. And we're adding capacity in some of the most important markets.

Despite the painful changes we have had to make, we continue to believe in the St. Louis market. And we are hoping to add flights, in a careful way, as the economics of our business improve and the demands of the traveling public in St. Louis become clear.

Just to cover the increase in fuel costs over the past two years, American would have had to raise fares nearly $75 per round-trip ticket. During this time period, our average fare increased by only $15.

Our planes should be full, which among other things means we have a golden opportunity... to build on the momentum reflected in the financial results we are reporting today.

That doesn't mean you have to have the lowest costs in the industry to succeed. But you need to make sure the activities and product attributes that increase your costs above the other guy bring in at least that much more in revenue, and hopefully more.

Markets that don't work we're going to step away from.

We continued the hard work of integrating TWA, because at that time we still thought an efficient connecting hub in St. Louis could be a profitable addition to our network.

One of our most difficult realizations was that-in the course of two years-a connecting hub in St. Louis had gone from something we thought we needed to something we could no longer afford.

But the St. Louis experience, perhaps better than anything else, illustrates just how much our industry has changed during the past three years.

I recognize these new contracts involve enormous sacrifices by our employees. We have our work cut out for us; we are not out of the woods yet.

Even with strong demand for air travel, we have been able to pass only a very small portion of that increase on to our customers.