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Dramatic shifts in the airline industry spread Tuesday as the nation's two largest airlines, American and United — announced they would shrink capacity by 9% this fall. For flyers, the cuts mean seats on the two airlines will sell out faster, particularly during the Thanksgiving and Christmas holidays, and planes generally could be more crowded. American Airlines CEO Donald Carty warned in an interview that the industry's success depends on the economy and what happens at other carriers, notably United who would be considering bankruptcy reorganization if it can't avoid a cash crunch this fall. In a reorganization, United could shed debt and renegotiate contracts with labor unions and suppliers, winning cost advantages that could help it under-price American. To begin to cut its losses, American said it will eliminate 7,000 jobs by March, about 6% of its workforce. Layoffs will come almost immediately with up to 550 pilots being furloughed. As part of its cost-cutting campaign, American will: Eliminate first class on trans-Atlantic and Latin American routes flown by Boeing 767-300 jets. All seats will be business class or coach class. First-class service will stay on trans-Pacific flights, trips to some European destinations such as London Heathrow and some routes to deep South America. Boeing 767-200s flying coast to coast will still offer three classes. Reorder flight schedules at its Dallas/Fort Worth hub to even out the flow of flights during the day. The changes will slightly increase wait times for connecting passengers there. But American expects the smoother operation will produce additional flying time to equal the capacity of seven narrow-body jets. Begin retiring its 74 Fokker 100 jets in mid-2003.