American Airlines is cutting back on domestic flights, laying off workers and adding new passenger fees as it struggles with record-high fuel prices.

American will begin charging a $15 fee for the first checked bag beginning June 15th. It will raise other fees for services ranging from reservation services to oversized bags.

The nation's largest carrier tells shareholders that it will cut its domestic flight schedule by up to 12 percent in the fourth quarter of this year.

Fort Worth-based parent AMR Corporation says reduced flying will lead to 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 plane grounded for faulty wiring last month.

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