- The Washington Times - Wednesday, April 16, 2003

American Airlines is giving its flight attendants one last chance to accept wage and benefit concessions to keep the world's largest airline out of bankruptcy.
American's flight attendants yesterday rejected the concessions, but the airline and union decided to extend the vote until this afternoon to give union members an opportunity to change their minds.
"This is our last chance to avoid bankruptcy," said Don Carty, chairman of AMR Corp., American Airlines' Fort Worth, Texas-based parent company.
The airline plans to file for bankruptcy immediately unless the flight attendants agree to the concessions by 6 p.m.
Airline officials had threatened to file for bankruptcy protection yesterday if any of the three unions voting yesterday on the $1.8 billion per year in wage, benefit and work-rule concessions failed to approve them.
Pilots and mechanics ratified more than $1.4 billion in concessions. However, a vote tally by the flight attendants failed to approve the additional $340 million the airline said it needed to avoid seeking Chapter 11 protection from creditors.
The 26,000-member Association of Professional Flight Attendants (APFA) rejected the concessions by 533 votes. There were 19,151 votes cast.
American and union officials decided to extend the deadline because of the slim margin. They also are allowing union members to change their votes.
"So that there is absolutely no confusion or uncertainty, I must make completely clear that if we fail to secure flight attendant ratification by tomorrow, we are regrettably left with no alternative but to immediately file for bankruptcy," Mr. Carty said yesterday afternoon.
He said the airline had loan repayments due todaythat could not be made without the $1.8 billion in employee wage and benefit reductions. The concessions American seeks from the three unions represent about 20 percent of its costs.
Airline industry analysts said a different vote count is probable today considering the alternative is bankruptcy.
"Nobody wants to do that," said Ray Neidl, airline-industry analyst for the Wall Street financial firm Blaylock & Partners.
Other analysts say bankruptcy would allow American to get rid of debts by court order that it could never eliminate by agreement with its unions.
American hopes to save $1 billion through wage and benefit reductions under the new agreements. The remaining $800 million in savings would come through work-rule changes that would cause job reductions.
Underscoring American's financial troubles, auditors for its parent company expressed doubt yesterday about the company's ability to stay in business, citing large losses and the need to cut labor costs. Ernst & Young LLP also raised doubt about whether AMR could meet a $1 billion liquidity requirement for an $834 million line of credit.
The auditors' concerns were included in AMR's annual report filed yesterday with the Securities and Exchange Commission.
Unions initially resisted any concessions because of wage increases they would lose and additional duties they would perform, but softened their stance when faced with the prospect of having their labor contracts thrown outby a bankruptcy court.
Sixty-nine percent of the Allied Pilots Association and 53 percent of the Transport Workers Union (TWU) voted for the new labor agreements.
Pilots and ground workers were able to change their votes until yesterday, but flight attendants were not, raising concern that many flight attendants had rejected the deal without an opportunity to vote on American's move to sweeten it last week with potential bonuses.
On Monday, the flight attendants union had sought an extension and complained that some members were having trouble casting votes by phone and via the Internet. The company denied the request at first, but altered course late yesterday when the vote appeared to be so close.
Mr. Carty has told workers that if American files for bankruptcy protection, the company would seek an additional $500 million in labor-cost cuts above the $1.8 billion in concessions it asked from the unions. The airline also would try to cut several thousand additional jobs.
This article is based in part on wire-service reports.



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