Possible Near-Term AMR Bankruptcy -Union


Aug 20, 2002
AMR's American seeks bankruptcy financing -sources

Monday March 10, 2:10 PM EST

CHICAGO, March 10 (Reuters) - AMR Corp.'s (AMR) American Airlines has quietly begun talks on Wall Street seeking up to $2 billion in bankruptcy financing should a Chapter 11 filing become necessary, a source familiar with the matter said on Monday.

"They're starting out with a very high, unreasonable request to raise $2 billion," said the source, who declined to be identified. The Fort Worth, Texas-based carrier is the world's largest airline, followed by UAL Corp.'s (UAL) United Airlines, which filed for bankruptcy in December.

A spokesman for American declined to comment on the talks, which are taking place with a number of financial institutions. The airline is actively pursuing cost-cutting agreements with its labor unions as a way to avoid a bankruptcy filing.

Several sources said the talks are in the preliminary stages and would involve the usual range of lenders to large bankruptcy cases, including Citigroup ©, J.P. Morgan Chase (JPM), CIT Group (CIT) and perhaps Boeing Co. (BA) Citibank offers a credit card linked to American's frequent flyer program.

AMR posted a record $3.2 billion net loss in 2002 and has outlined a goal to cut $4 billion in annual costs to stay afloat. It has hired bankruptcy lawyers and a financial advisory firm, sources have told Reuters.

©2003 Reuters Limited.

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By Jon Herskovitz
DALLAS (Reuters) - The union representing flight attendants at American Airlines said it sees the world''s largest carrier filing for bankruptcy sooner rather than later.
The Association of Professional Flight Attendants has reason to believe that the timing for an AMR bankruptcy may be sooner rather than later, President John Ward said, adding that the union plans to meet with airline management in order to hammer out a relief package for the carrier.
Ward, the head of one of the three major unions at American, said in a communication with members over the weekend that it is in the best interest of his union to do everything possible to avoid a bankruptcy of American parent company, AMR Corp. (AMR).
This certainly is not a position we would choose to be in, however, the situation is what it is and an AMR bankruptcy filing would only make this difficult situation worse, Ward said.
Ward and other APFA leaders were holding meetings in the Dallas area and were not immediately available to offer more information about the timing of a possible bankruptcy.
American has stated that time is of the essence and it is committed to working with its union leaders and employee groups to quickly find mutually acceptable solutions to its situation, said American spokesman Todd Burke.
AMR shares were off 34 cents, or about 12 percent to $2.47 on the New York Stock Exchange.
Last month, American asked its employees to accept $1.8 billion in wage and other concessions. The company is losing about $5 million a day and has said its current losses were unsustainable.
AMR Chief Executive Don Carty has said the airline must slash $4 billion in annual costs, including the $1.8 billion in wage concessions, in order to stay in business.
Carty said in a separate communication with American employees over the weekend he thought the company''s goal in annual wage reductions was achievable and would make the airline a strong competitor in the industry.
I think it''s clear to everyone that we do face very, very tough choices, Carty said.
Our goal is to get our costs down to competitive levels, to offer fares competitive with the low-cost carriers, and then to best them all with a superior product and people, Carty said, adding this idea is a part of a new marketing campaign.
I don''t know about you, but I''m tired of hearing about the success of the low-cost carriers; I want them to hear about us for a change, he said.
All three of the major unions at American have said they are meeting the carrier''s call to consider wage concessions, which analysts said were essential if the world''s largest airline wants to avoid bankruptcy
The other two main unions at American said Washington should consider measures to help the troubled air industry, including tax relief.
©2003 Reuters Limited.