July 2 (Bloomberg) -- AMR Corp.'s American Airlines will eliminate as many as 900 flight attendant jobs as the world's largest carrier begins grounding planes and cutting flights to combat record fuel prices.

American told the Association of Professional Flight Attendants today the jobs would be cut as of Aug. 31, the union said on its Web site. The carrier and the union have reached an agreement to offer leaves and early retirement to eligible attendants to help reduce furloughs.

The attendants are the first unionized group of workers to be notified of pending layoffs as Fort Worth, Texas-based American prepares to cut domestic capacity 12 percent in the fourth quarter. The airline and other major U.S. carriers have already said they'll pare at least 11,850 jobs and ground 413 aircraft as fuel costs, their biggest expense, erode profits.

``These are difficult but necessary changes given the unprecedented challenges we face with overcapacity in the industry, skyrocketing fuel prices and a worsening U.S. economy,'' said Tim Wagner, an American spokesman.

The 900 jobs would be about 4.7 percent of the 19,000 flight attendants currently working for American.

Transport Workers

American hasn't yet determined the number of pilots or other workers that may face furloughs, Wagner said. The company earlier said it would cut 8 percent of management and staff jobs, without providing a number.

The airline also said today it reached agreement with the Transport Workers Union, its largest labor group, for early retirement offers. Job cuts haven't been quantified. Members of both unions must be 50 or older, have worked for American at least 15 years and not be on furlough to qualify.

Most airline labor agreements contain furlough provisions that guarantee employees a chance to return to jobs before new workers are hired. The recall rights last for five years. Furloughed workers can file for unemployment and are eligible for employee rates on medical insurance premiums.

The pilots union at American Eagle, the regional carrier for American, last week reached an agreement with the company that may save at least 100 jobs. The plan includes leaves of absence, part-time work and the transfer of 10 aircraft back to Eagle from Trans States Airlines. Eagle also is owned by AMR.

American is parking as many as 45 airplanes and dropping service to three airports. Another 40 small jets will be pared from Eagle, along with 35 Saab turboprop aircraft, as the regional airline ends service to five airports. Both carriers are reducing flights from Dallas-Fort Worth, Chicago, St. Louis and New York's LaGuardia airports.

AMR fell 23 cents, or 4.7 percent, to $4.62 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 67 percent this year.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

Last Updated: July 2, 2008 16:04 EDT