- The Washington Times - Wednesday, February 26, 2003

FORT WORTH, Texas, Feb. 26 (UPI) — The pilots union at American Airlines Wednesday disavowed a prediction that the financially troubled airline might face bankruptcy by May.

Capt. John Darrah, American Pilots' Association president, said the forecast reported earlier Wednesday by The Dallas Morning News was the calculation of a local union official and not the position of the union that represents 13,500 pilots.

The News reported an analysis by the pilots union found the airline was fast running out of cash reserves and could face bankruptcy by the end of May.

Darrah said the story was based on information obtained from the official's Web site, which contained a summary from a recent meeting with members. He said the official made some "back-of-the-envelope" calculations on his own.

"This prediction in no way constitutes an official APA position," Darrah said. "It is not based on any information from the extensive series of internal meetings that have taken place between APA and American Airlines management during the past several weeks."

Darrah said the union is unwilling to make any prediction because of the numerous variables that could impact the airline's financial future.

American spokesman Bruce Hicks said the airline would not comment on the prediction. "They understand the urgency that we need," he said.

American is seeking $1.8 billion in wage and benefit concessions from its three major unions in order to avoid bankruptcy.

Although American began 2003 with $2.7 billion in cash, $775 million of that is restricted and can't be used for paying bills, the News reported. About $1.9 billion remains, but the airline will have to refinance some of its debt this spring, which is estimated to cost $200 million. This lowers the balance on hand to $1.7 billion.

About $1 billion is the minimum required to keep American operating, the News reported after consulting airline analysts. United Airlines filed for Chapter 11 protection in December with about $800 million in cash on hand.

In January, American officials said the carrier was losing about $5 million a day and would continue to suffer the same loss level through the winter. With that figured in, the APA official estimated the company would have to file for bankruptcy May 25.

There are several factors that could affect the timeline for American, including a possible war with Iraq. Jet fuel prices are more than double what they were a year ago and would climb even further if the United States goes to war in the Persian Gulf.

American announced Feb. 5 that it would seek $1.8 billion in concessions from its employees and vendors. AMR, American's parent company, lost $3.5 billion last year and $1.8 billion in 2001.

Unions representing American's pilots and flight attendants have recognized the airline's financial crisis and said they are willing to work with the company on possible concessions. Talks are currently under way between the company and union officials.

American has asked for permanent concessions totaling $660 million from pilots, $620 million from ground workers, $340 million from flight attendants, $80 million from ticket agents, and $100 million from management.


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