American Airlines parent AMR Corp said on Friday it would furlough up to 175 pilots in the first half of 2010 because it has reduced flight capacity and not enough pilots are leaving on their own.

The impact of the economy and reduction in capacity over the last 18 months, coupled with lower-than-expected pilot attrition, has resulted in a pilot surplus, AMR said in a statement.

AMR's capacity -- the number of available seats -- on American was down 4.9 percent in the fourth quarter compared with the same period a year ago. Its load factor, or percentage of seats filled, was 81.1 percent, compared with 78.3 percent last year.

While the percentage of seats filled has risen, this is because airlines have cut the number of seats they sell to better handle reduced demand and volatile fuel prices.

The furloughs will begin February 28 with the departure of 80 pilots, AMR spokeswoman Missy Latham said.

Latham would not say how much money the company would save from the furloughs. She said the last pilot furlough was in 2005 when the carrier cut 302 jobs.

The airline industry -- including AMR -- cut jobs in 2008 and 2009 to combat the pressures of volatile fuel costs and an economic recession that eroded travel demand.

Demand for lucrative business travel is picking up, but the outlook remains uncertain, AMR executives said this week. The company posted a fourth-quarter loss on Wednesday.

The Allied Pilots Association (APA), which represents AMR pilots, said it is working with the airline to mitigate the impact of furloughs with early retirement incentives.

It's just another example of the continuing sacrifices of our pilots, APA spokesman Gregg Overman said.

AMR has 7,800 active pilots and 1,200 on furlough. The airline has been in labor talks with the APA for more than three years and plans to resume negotiations in February after a four-month break.

The National Mediation Board assigned a mediator to the talks in 2008. The APA says it believes talks have reached an impasse that cannot be broken without a government-imposed deadline.

AMR shares were up 5 cents, or 0.61 percent, at $8.31 on the New York Stock Exchange.

(Reporting by Kyle Peterson, editing by Gerald E. McCormick and Robert MacMillan)