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That is "poor" mileage, even for an automatic 240. The o2 sensor, if it has more than 60K miles on it, is sure to be one of the culprits. The air mass meter can be adjusted to "trim" the mixture, there is a procedure for this (IIRC) in the 700/900 FAQ which you can get to from the drop-down features menu at the top of this page.
The catalytic converter may be partially plugged, as well. These are the things that I would look at first, in addition to new air and fuel filters, plugs/plug wires/cap/rotor.
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