NEW YORK (AP) -- American Airlines' cost-cutting agreements with unions are a major step in the company's bid to avoid bankruptcy, but it still must overcome worries about terrorism, an ailing economy and the war with Iraq.þþThe company appeared Monday to have secured the $1.8 billion in concessions needed to avert Chapter 11, but the agreements require approval from members of unions representing pilots, flight attendants and mechanics. The ratification process will begin Tuesday, union officials said.þþNews of the tentative agreements lifted shares of American by 33 percent as investors considered a bankruptcy filing much less likely.þþCompany chairman Don Carty praised union leaders, saying they ``have enabled us to avoid an immediate filing with the bankruptcy court.''þþBut despite the tentative deals, the carrier is not guaranteed a smooth ride, analysts said.þþ``If the war lasts for many months or if there's another act of terrorism, then even these cost savings could prove insufficient,'' said Philip Baggaley, Standard & Poor's airline analyst.þþEven if employees ratify the agreements, analysts said it will still be critical for parent company AMR Corp. to secure additional financing from lenders as well as better deals from suppliers and lessors.þþExperts said the talks were probably affected by last week's agreement between United Airlines and its pilots' union on $1.1 billion in cuts.þþ``I think that has helped focus their minds,'' said Peter Cappelli, a professor of management at the University of Pennsylvania's Wharton School of Business.þþUnited, which is restructuring under Chapter 11 protection, has said deep cuts were needed to avoid liquidation. American, meanwhile, had indicated it would file for bankruptcy protection soon unless it reached tentative agreements with its major labor groups Monday.þþOther major airlines also are pushing employees to accept wage and benefit cuts as the industry suffers huge losses, and analysts said the momentum at United and American could spread.þþAfter the war in Iraq began, carriers laid off thousands of employees, cut flights and reduced the frequency of others. But even with the new labor contracts, analysts say major carriers still need to cut capacity further, which would likely allow them to raise ticket prices.þþDuring the weekend, American reached tentative agreements with 2,500 ground workers. The company previously reached a tentative deal with 16,300 baggage handlers. However, there were still no deals with the three most important labor groups in its work force of 99,000.þþThe Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union reached separate deals throughout the day Monday.þþAMR has lost nearly $5.3 billion the past two years and has faced increasing competition from low-fare carriers.þþAlso Monday, Carty, the chairman, said he would cut his base salary by a third, decline a bonus for the third straight year and ask the board of AMR to reduce the compensation of other senior officers. Carty had a base salary of $585,813 in 2001. He took a pay freeze late in 2001 and in 2002.þþShares of American rose 52 cents to $2.10 on the New York Stock Exchange.þþ
Source: NY Times
