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American Airlines, struggling with escalating fuel expenses, said today it would charge $15 for checked baggage, slash domestic flights and lay off an unspecified number of workers.

In a dramatic series of moves that it said were needed to "remain viable," the nation's largest airline and the largest carrier at Los Angeles International Airport also said it would retire at least 75 older, fuel-guzzling aircraft.

The fee for the first checked bag marks the first time that an airline will charge for a service that has always been included in the airfare.

That fee applies to passengers who purchased discounted tickets and starts June 15. The airline said it also plans to raise other fees for services ranging from reservation help to handling of oversized bags.

"The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak U.S. economy," Gerard Arpey, chief executive of American Airlines parent AMR Corp., said in a statement.

Arpey said that the airline also plans to cut the number of seats on domestic flights by 11% to 12% in the fourth quarter. American had previously expected fourth-quarter capacity to fall 4.6% from the same period in 2007.

The cuts in so-called domestic capacity will lead to an unspecified number of job cuts at both American and its American Eagle subsidiary, the airline said.

Many of the airplanes it plans to retire will be the older MD-80 aircraft, which were temporarily grounded last month because of missed wiring safety inspections.

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