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American Air aims to boost revenue by $1 billion

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May 7, 2012 04:38 PM EST | AP

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NEW YORK — American Airlines plans to focus more on international flying and make better use of smaller jets in the U.S. as part of an effort to boost annual revenue by $1 billion within 5 years.

Fort Worth, Texas-based American thinks it can achieve almost two-thirds of that revenue goal by increasing its use of regional jets and making adjustments to better fit its aircraft to travel demand.

"We sometimes fly too many seats at times of day when there is not enough demand to profitably fill them," the company said in a memo to employees Monday.

At Chicago O'Hare, for example, United flies large regional jets in off-peak hours to save money, but American doesn't have the ability to do that. Larger regional jets typically have 70 to 100 seats. American's MD-80s have 140 seats.

American also aims to make agreements, known as code-sharing, with other airlines that will allow it to get more passengers without adding costs. For instance, such an agreement with another airline at New York's John F. Kennedy could feed customers into American's domestic or international flights, depending on the partner.

American also believes it can increase the sale of onboard extras onboard like Wi-Fi, roomier coach seats and lie-flat seats on international flights.

American aims to have 44 percent of its flying on more lucrative overseas flights by 2017, up from 38 percent today.

AMR Corp., American's parent, has been operating under bankruptcy protection since Nov. 29. US Airways Group Inc. has said it's interested in a merger with American.

Leaders of three labor unions at American announced two weeks ago that they had agreed to tentative labor contracts that would take effect in case US Airways merges with American. The unions hope that a merger would reduce the need for thousands of job cuts and other reductions that American proposes to save money.

AMR has said it wants to exit bankruptcy protection as a stand-alone carrier.

Besides the revenue growth, American thinks it can save $2 billion a year from cutting employees, restructuring debt and grounding old planes. American's latest plan to cut costs includes the potential elimination of 10,000 jobs – scaled back from 13,000 originally.