GERARD ARPEY

But I don't think the popularity of flying has diminished a bit.

The executive moves we are announcing today will strengthen American for the long-term future and reflect well on the depth of the Company's management team.

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.

I think in just about any business the low cost competitor is always going to have an advantage.

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.

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.

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.

We need to take excellent care of our customers, and do so at a profit.

At American Airlines, we have built a business around the love of travel that has lasted three quarters of a century. And I'm pretty sure we're just getting started.

It is not good thinking - either at the corporate level or at the personal level - to believe you can simply walk away from your circumstances.

But I don't think the popularity of flying has diminished a bit.

Second, we have to make the most of the strengths we have, the amenities that many of our competitors cannot replicate. But again, those advantages won't mean much if we don't do a great job with the basics of our business.

However, the economics of our business continued to deteriorate. We barely escaped bankruptcy a year ago, and in the aftermath of that escape we had to make some even tougher decisions.

The executive moves we are announcing today will strengthen American for the long-term future and reflect well on the depth of the Company's management team.

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.

It is not good thinking - either at the corporate level or at the personal level - to believe you can simply walk away from your circumstances.

We need to take excellent care of our customers, and do so at a profit.

At American Airlines, we have built a business around the love of travel that has lasted three quarters of a century. And I'm pretty sure we're just getting started.

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.

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.

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

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.

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.

This airline is grateful for his extensive contributions and we will miss his friendship and support. We extend our deepest sympathies to the Casey family on its personal loss.

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.

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.

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.

We have, unlike many of our competitors, continued to meet our various financial obligations.

I think in just about any business the low cost competitor is always going to have an advantage.

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.

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.