American Airlines Pushes Capacity Constraints

The CEO of the world's largest airline is trying to exert leadership in his notoriously undisciplined industry.

In fact, Gerard Arpey, CEO of American Airlines parent AMR(AMR Quote), is trying to lead by example. Arpey said last week that in 2007 American will cut overall capacity by 1%, with a somewhat larger decrease in domestic capacity.

"There is still a lot of destructive competition, particularly in the U.S. markets today, and particularly with flow traffic," Arpey said, on a conference call. "That's why we remain very cautious in terms of our own capacity, and I think macroeconomics suggest that the industry should feel the same way." ...