American Airlines Inc. said Tuesday it will cut up to 200 pilot jobs beginning in October as part of its efforts to reduce expenses in the face of sharply rising fuel costs.

"Difficult economic conditions, particularly the cost of jet fuel, are the key drivers behind our capacity cuts," American spokeswoman Tami McLallen said. "When you cut capacity, that unfortunately means you have to reduce our staff across all work groups."

In a meeting with the Allied Pilots Association, the carrier also proposed steps to reduce involuntary furloughs, mainly by giving incentives to higher-paid veteran pilots to retire early.

"The company's proposal would provide financial incentives for senior captains ready to voluntarily leave and create advancement opportunities for junior pilots," American said.

"If accepted by the APA, this agreement could significantly minimize the number of pilot furloughs," the airline said.

"It would also provide the company with the flexibility to recover from heavy retirement periods and greater ability to manage the short-term operational demands we are facing."

The pilots' union was critical of the proposal, saying that the carrier continues to have too few pilots to cover its schedule. In a hotline message to members, the APA noted that American had recalled 25 furloughed pilots in June.

"Although the prospect of pilot furloughs is not a complete surprise, given the previously announced flight attendant furloughs, it's difficult to understand the logic behind any pilot furloughs from an operational standpoint," pilot Kevin Cornwell said on the message.

According to the union, American offered a maximum of 4.5 months severance pay and made the proposal only to captains: 40 who fly Boeing 777s, 20 on Boeing 767s, 60 on Airbus A300s and 80 on McDonnell Douglas MD-80s. The company would decide their retirement date, not the captains.

The company proposal would let American schedule pilots to a maximum of 82 hours a month, up from 78. On an emergency basis and with both airline and union in agreement, the airline could schedule pilots to a maximum of 95 hours if more pilots quit than anticipated.

American's parent, AMR Corp., has said it intends to reduce its workforce of 85,500 in line with its planned 8 percent reduction in capacity after Labor Day – about 6,800 positions.

AMR shares fell 6 cents to $4.41.