American Airlines plans to cut back on US domestic flights by as much as 12 percent, axing staff and charging extra fees.

The largest US carrier moves, announced yesterday, come as it grapples with record-high fuel prices.

Starting on June 15, it will also be adding a $15 fee for the first checked bag on flights within the US.

The airline said yesterday that it would raise other fees for services ranging from reservation help to oversized bags. The other fees will mostly range from $5 to $50 per service, the airline said.

Last month, American announced it would join other carriers in charging $25 for second bags checked for some passengers, but it wasn't immediately clear how yesterday's announcement would affect that.

While flights to and from Bermuda will not be directly affected, American plans to cut domestic flight capacity by between 11 and 12 percent in the fourth quarter which means fewer connections will be available.

American had previously expected fourth-quarter capacity to fall 4.6 percent from the same period in 2007.

Parent AMR Corp. said reduced flying will lead to an undisclosed number of job cuts at both American and its American Eagle subsidiary.

AMR expects to retire 45 to 50 planes from its fleet, most of them gas-guzzling MD-80 aircraft. Those were the planes grounded for faulty wiring last month.

American said rising oil prices have increased its expected annual fuel costs by nearly $3 billion since the start of the year.

"We understand that these fees affect customers." said AMR chairman and CEO Gerald Arpey in a press release issued yesterday. "The bottom line is that our revenues must keep pace with our increasing costs."

AMR shares tumbled $1.10, or 13.4 percent, to $7.10 after the announcement which came as its shareholders gathered for their annual meeting.