American Airlines Knew Fare Plan Would Lose Money, Ex-Employee Says

American Airlines knew when it initiated a radical fare restructuring last year that it would have a “devastating” impact on revenues, a former American executive testified Friday.

John Garel, vice president of business development at Northwest Airlines, said he studied American’s “value pricing” plan in 1990, when he was director of yield maintenance at American.

“The numbers were absolutely devastating at the time and wound up being similar to the numbers we saw in the marketplace,” said Garel, 34, the last witness presented by Continental Airlines and Northwest in their $3-billion antitrust suit against American.

Garel’s testimony was given to support claims by Continental and Northwest that American, a unit of Fort Worth-based AMR Corp., cut prices with its “value plan” fare restructuring with the intention of driving weaker carriers out of business.

Garel appeared on the ninth day of testimony in the closely watched case. The trial is expected to last two more weeks.