American Airlines said on Wednesday that it is taking steps to reduce costs, effectively downsizing the company as fuel prices rise to record levels.

Shares of American Airlines parent AMR Corp. fell $1.17, or 14.27 percent to $7.03 in late morning trading.

The world's biggest airline said today at its annual shareholders' meeting that it would reduce its seating capacity by up to 12 percent in its fourth quarter and take as many as 75 planes out of service. Previously the company had expected to cut capacity by 4.6 percent in the quarter.

The company did not say how many job losses it expects at American Airlines and regional carrier American Eagle.

It also announced new fees for customers, with increases ranging from $5 to $50. Among them is a $15 charge for their first checked bag starting in the middle of June.