US airline executives yesterday stressed the debilitating nature of rising fuel prices and said further capacity reductions may be warranted, while Delta Air Lines announced that it is raising its second-half year-over-year domestic mainline capacity reduction from a previously announced 10% to 13%. Carriers said they have been unable to come close to passing on the record fuel price increases to customers. "The current environment will cause more harm [to US airlines] than the period after 9/11," Alaska Air Group Chairman, President and CEO William Ayer told the Merrill Lynch Global Transportation Conference in New York, available via webcast. He noted that Alaska Airlines spends an average of $147 per passenger on fuel costs alone on a Seattle-Newark flight. "We're paying more now for refining margins than we used to pay for the all-out product just a few years ago," he said. American Airlines parent AMR Corp. Chairman, President and CEO Gerard Arpey said fuel costs are "negating all of the [cost-cutting] progress we have made in the last few years. . .Despite our best efforts, fares are not keeping pace with the meteoric rise in fuel prices." AA still plans to take delivery of 70 737NGs in 2009 and 2010 to facilitate the retirement of fuel-inefficient MD-80s, Arpey said, adding that it is considering pushing forward deliveries "at an even brisker pace." Additionally, it is considering "accelerated retirement" of its A300s. It is currently 33% hedged at $2.55 per gal. (at an average cap of $78 per barrel of crude oil) for full-year 2008. Southwest Airlines, meanwhile, was the only profitable US carrier in the first quarter and is still contemplating expansion. CEO Gary Kelly told Bloomberg News that the LCC is "willing to grow the fleet, and that's very different than what's going on with our competitors." He said it may keep as many as 10 aircraft slated for retirement this year and is on schedule to add 14 new planes in 2009. The Associated Press reported that SWA plans to increase capacity 4% this year and has yet to make its plans for 2009, although Kelly said it is "obviously prepared" to cut all growth if necessary. He also told Bloomberg that SWA has no plans to charge for extra bags or onboard drinks like some competitors, calling it a "great opportunity" to "differentiate itself from the pack."