By Ina Paiva Cordle | Miami Herald

Grappling with sky-high fuel prices and an economic downturn, American Airlines said Wednesday it plans to cut domestic flights, eliminate thousands of jobs and raise fees, including charging many domestic passengers $15 for the first checked bag.

The moves mark a dramatic turn in an industry struggling to boost revenue to compensate for soaring costs.

''The U.S. airline industry, as it is constituted today, was not built for $125 per barrel oil,'' American Chairman and CEO Gerard Arpey said during parent AMR's shareholders meeting in Fort Worth, Texas. ``The industry will not and cannot continue in its current state. The fact that four airlines have liquidated this year and one is operating in Chapter 11 should be clear evidence of that fact.''

American, the world's largest airline, plans to cut domestic flight capacity by 11 percent to 12 percent in the fourth quarter and overall capacity by about 7 percent. American had previously expected fourth-quarter capacity to fall 4.6 percent from the same 2007 period.

Arpey didn't specify how many jobs would be cut at American and American Eagle, but acknowledged the figure would be in the thousands. He said the cuts could lead to facility consolidations or closures.

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