DALLAS (Reuters) - The three main unions at American Airlines said on Tuesday 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.þþThe unions know that if they do not act now, they may suffer a fate like their counterparts at bankrupt United Airlines' UAL Corp. (UAL.N) and US Airways (UAWGQ.OB). Union members there have faced draconian wage cuts or a complete scrapping of their contracts as part of court-supervised restructuring.þþLast month, American, a division of AMR Corp. (AMR.N), asked its employees to accept $1.8 billion in annual employee-cost reductions.þþAll three unions acknowledged they will have to accept some sort of concessions, saying it will be a bitter pill they will have to swallow under the threat of bankruptcy. They said they do not want concessions they may agree to now to become permanent contract changes.þþ``The company is fully prepared to file for bankruptcy to obtain relief from all of its labor agreements as well as its other creditors,'' said James Little, the director of the Air Transport Division at the Transport Workers Union, which represents American's 33,000 ground and airport personnel.þþLittle said in a regular communication to union members that in normal times, the union would not even dream of modifying any of its contracts with American.þþ``These are not normal circumstances,'' Little said.þþLittle said if the union does not bargain in good faith and offer relief to American now, its position will be severely compromised before any bankruptcy court.þþAmerican on Monday presented a detailed plan for employee-cost reductions to the TWU as a part of its request for $620 million in annual concessions from the union. The union and American management are in accelerated discussions on the concession proposals. þþUNSUSTAINABLE LOSSESþþAMR is losing about $5 million a day. It lost an industry record $3.5 billion in 2002, when air travel dropped after the attacks of Sept. 11, 2001.þþAMR Chief Executive Don Carty has said the losses were unsustainable. He said the airline must slash $4 billion in annual costs, including $1.8 billion in wage concessions, in order to stay in business.þþ``With the kind of losses that this company has been enduring -- very unsustainable losses -- there is no question that there is a real sense of urgency to reach resolution with our labor groups,'' said airline spokesman Bruce Hicks.þþ``We think we are making great progress,'' he said.þþAll sides admit that a war in Iraq would greatly hurt the struggling carrier through higher fuel prices and an almost certain drop in demand for air travel.þþTalks are probably the most advanced between American and the Allied Pilots Association, the union that represents some 13,500 pilots at the carrier. The two sides have been discussing a new contract for over a year and a half and the airline has asked the union for $660 million a year in employee-cost reductions.þþThe union has said it was willing to explore cost savings with the airline.þþSteve Blankenship, communications chairman for the union, said it does not want to make the same mistakes as their peers at United in not informing its membership of American's dire fiscal position. He also called on American not to follow the path of United management by not giving full disclosure about the ramifications from its weakened financial status.þþThe APA has called on Congress to grant some temporary relief to the airline industry through items such as tax breaks.þþAMR shares have fallen by over 90 percent in the last year and J.P. Morgan airline analyst Jamie Baker said the key for American was reaching concession deals with its employees.þþ``With a significant labor deal in place -- even against a backdrop of a possible war -- we would fully expect AMR to enjoy both relatively unfettered access to additional funding, and a significantly improved loss forecast,'' he wrote in research notes last week.þþJohn Ward, the head of the union for American's flight attendants, said bluntly, ``Management has a gun to our heads.''þþWard said in a recent communication with members that he sees American ratcheting up the pressure in the coming days to achieve its goal of $340 million in annual concessions from the union.þþ``As distasteful a proposition as concessions are, the threat of bankruptcy is even worse,'' he said. þþþ
Source: NY Times
