American Airlines Hints at Scaling Back : Transportation: Shareholders are told that the carrier is weighing its options in seeking to restore its financial health.

American Airlines, which set the industry’s rapid expansion pace during the 1980s, told shareholders Wednesday that it might have to pull out of money-losing markets as it grapples with financial troubles in the ‘90s.

At the annual meeting of AMR Corp., the airline’s parent, Chairman Robert L. Crandall refused to say specifically where American might scale back its operations. But he pointed to short-haul markets where American has trouble competing with low-cost rival Southwest Airlines.

Crandall said he is considering “many non-traditional options” to restore financial health to his carrier, which lost about $240 million last year.

He called scaling back service “certainly not the most popular choice.” In many markets, particularly California, Southwest undercuts American with lower-cost tickets on flights that do not serve meals, offer assigned seating or such amenities as baggage transfers.

“We simply cannot compete with Southwest in the short-haul, point-to-point, simple product market,” Crandall said. He pointed out, however, that Southwest’s no-frills service is not something travelers seem to want in long-haul markets, and it would not work in markets that require connecting service.

Crandall said American is also considering using more small airplanes, both jets and turboprops. The airline may also streamline operations on short routes, where it is expensive to offer the full services provided on longer flights.

American has already said it will slow its expansion rate by sharply cutting back capital spending plans, a move that was quickly followed by rivals United Airlines and Delta Air Lines. American spokesman Al Becker said Wednesday’s comments did not mean American plans to shrink, because it continues to expand in other markets.

American’s recent losses have mirrored those throughout the industry. Carriers were hit hard when the Persian Gulf crisis pushed fuel prices sharply higher in late 1990 and early ’91. They ran into further troubles when the recession cut into demand for air travel.

The No. 2 executive at American, Donald Carty, acknowledged to reporters that any plans to cut back, which could conceivably involve closing a money-losing hub, are not easily accomplished because the airline would be unable to reduce costs as fast as it cuts service.

American has questioned in the past whether it needs to keep all of its hubs.

Crandall told shareholders that a recent fare initiative launched by American is proceeding pretty much as planned, although the airline is not bringing in as much money as hoped because two rivals now in Chapter 11, Trans World Airlines and Continental Airlines, keep trying to lower the price of some tickets.

American’s fare-simplification plan cut the price of first-class and unrestricted coach fares, while limiting the number of discount fares available.