American Airlines announced they will suspend their growth plans for 2011. Primary factor in this decision is the rising cost of oil in a volatile market and a recovering economy. Their plan is to fly less domestically resulting in higher ticket prices. The airline industry according to AMR spokesperson Tim Smith, have hiked fares 12 to 14 times.

AMR has been hammered for the year down close to 30%, currently at $6.56 -0.18 (-2.67%). American Airlines lost an estimated $50 million in revenue due to the cancellation of over 8,000 flights during storms across the U.S.

American plans to phase out their fleet of MD-80’s with the newer and larger Boeing 737-800’s that are 35% more fuel efficient. Luckily for American they were able to hedge 35% of their estimated fuel consumption for 2011 at $2.52 a gallon. Currently the cost of one gallon of fuel is $2.83, up almost 40% from 2010.

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American Airlines, the second largest U.S. airline posted a biger than estimated loss at $505 million or $1.52 per share for the first quarter of 2010. The same time last year AMR recorded a $375 million, or $1.35 per share loss. Rising fuel costs and a weak economy are still hampering the airline industry recovery.

From the CEO: “As we move forward, we remain focused on continuing to bolster our domestic and international networks, managing our costs, and finding ways to generate additional revenue,” Chief Executive Officer Gerard Arpey said in a statement.

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