American to charge $15 for 1st checked bag

American plans to cut domestic flight capacity by 11 percent to 12 percent in the fourth quarter, after the peak summer season is over. The carrier was previously planning a 4.6 percent cut.

Shares of American parent AMR Corp. tumbled 24 percent, down $1.98 to $6.22, as oil prices shot past $130 per barrel for the first time, signaling even more trouble for the nation's airlines.

American said rising oil prices have increased its expected annual fuel costs by nearly $3 billion since the start of the year.

In a further sign of the problems facing the industry, Southwest Airlines Co., the only major U.S. carrier to post a profit in the first quarter, won't earn as much for the rest of 2008 as it did a year earlier, its chief executive warned.

American said Wednesday that the fee for the first checked bag starts June 15, and it will raise other fees for services ranging from reservation help to oversized bags. Those fees could cost between $5 to $50.

United Airlines, the nation's No. 2 carrier, is "seriously studying" imposing its own fee on first bags, spokeswoman Robin Urbanski said. Delta Air Lines, the third-largest, has no current plans for a fee but is considering all options, spokeswoman Betsy Talton said. AirTran Airways and Northwest Airlines said they were weighing their response.

Last month, American joined other carriers in charging $25 for a second bag checked by passengers. The major airlines have also raised fares about a dozen times in recent months.

The first-bag fee will be charged to everyone except people who belong to elite levels of its frequent flyer program, those who bought full-fare tickets, and those traveling overseas.

Chairman and Chief Executive Gerard J. Arpey said he expects the fees will raise "several hundred million dollars" for American.