This is a multi-part message in MIME format. ------=_NextPart_000_003B_01C51393.07893540 Content-Type: multipart/related; boundary="----=_NextPart_001_003C_01C51393.07893540" ------=_NextPart_001_003C_01C51393.07893540 Content-Type: text/plain; charset="US-ASCII" Content-Transfer-Encoding: 7bit FORT WORTH - The U.S. Postal Service says American Airlines just isn't efficient enough to deliver the mail. As of Saturday, postal officials say, the post office suspended its contract for domestic mail delivery with American, the nation's largest airline, after American failed to meet certain performance goals, including on-time delivery. For consumers, mail delivery won't be affected, postal officials say. But the decision could cost the airline tens of millions of dollars this year, at a time when Fort Worth-based American is already struggling with high fuel prices and intense competition that has driven down airfares. "Revenue is revenue, and right now American doesn't have a lot of it," said Robert Mann, an airline industry analyst and consultant with R.W. Mann & Co. of Port Washington, N.Y. "So they'll have to make it up somewhere else." American executives, however, dispute the postal service's claim. They say the contract remains in force, while acknowledging the airline is in talks with the post office regarding future mail delivery. "We're having a conversation about the nature of our relationship," said Tim Wagner, a spokesman for the airline. "But our contractual relationship with the postal service has not changed." Wagner also noted that American's international mail delivery remains unaffected. According to postal officials, the suspension affects all mail carried by the airline to the cities it serves in the United States. Mail delivery, however, should not be affected. "This won't mean anything to mail service," said John Bonafilia, manager of commercial air operations for the postal service. The postal service also suspended domestic mail delivery on U.S. Airways, citing similar problems. Bonafilia said American had carried about 10 percent of the nation's domestic mail, including letters and small packages. He said other airlines under contract with the postal service are picking up the excess and that postal service customers should not see any delays. "They were not meeting the goal of on-time performance," said Jim Quirk, a spokesman at the postal service's Washington headquarters. "We gave them time to meet goals and they didn't." Bonafilia said the postal service installed a new mail distribution and routing system in 2003. The system electronically tags each piece of mail and each is tracked as it moves through the system, which includes the airlines that carry the mail. Bonafilia said American was put on notice in December and given until Feb. 10 to comply. Officials with neither American nor the postal service would disclose the value of the airline's contract. But according to data from the Transportation Department, American collected about $73 million from domestic and international mail delivery during the first nine months of 2004, the latest figures available. That would make American the second-largest passenger airline in terms of mail delivery, after United Airlines. Passenger airlines have carried U.S. mail since the industry's inception -- in fact, the first airlines focused on mail delivery before taking on passengers. But in recent years, domestic mail has become increasingly less important, particularly as passenger loads have increased, leaving less room in airplane cargo holds for letters and packages. For example, American collected nearly $38 million in the third quarter of 2000 from mail delivery, both domestic and international. The same quarter last year -- the most recent period for which figures are available -- showed $22 million in mail revenues. That's a 42 percent decline. Some airlines have gotten out of the mail business. Northwest Airlines, for example, no longer delivers domestic mail, although it still carries mail on international routes. "Depending on what the cost involved is to the airlines, this may not be that big a deal to American," Mann said. "Still, they can't afford to walk away from revenues these days." _____ Mail Money [body]Carrying mail for the U.S. Postal Service brought tens of millions of dollars in revenues to passenger airlines during the third quarter of 2004. Carrier Revenues from mail* United Airlines $35.4 million American Airlines $22.47 million Delta Air Lines $14.95 million Continental Airlines $10.48 million Alaska Airlines $8.6 million Northwest Airlines $6.29 million Southwest Airlines $5.58 million America West $1.9 million US Airways $1.33 million JetBlue Airways $188,080 (*) Revenues collected for mail delivery during the quarter, for domestic and international flights. 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