DALLAS (Reuters) - American Airlines is betting that massive labor concessions will keep it out of bankruptcy as it tries to recover from some of the worst tragedy, sorrow and downright bad luck a carrier has ever endured.þþThe company, the world's largest airline, struck tentative agreements on March 31 with its three main unions. By Tuesday, all members will have voted on the deals, which are aimed at saving American $1.8 billion in annual labor costs.þþIf American wins agreement to the deals, it hopes to emerge as a carrier that can entice customers with its leading global network and, with costs under control, to compete with low-fare carriers such as Southwest Airlines Co. (LUV.N).þþAlmost the entire airline industry has been reeling since the Sept. 11, 2001, attacks on the United States, which caused demand to plummet and increased costs for insurance and security. The war in Iraq has only made matters worse.þþBut American, a division of AMR Corp. (AMR.N), has seemed to be particularly hard-hit.þþThe company and other large-network carriers were struggling before Sept. 11 as demand shifted away from business-class tickets and unrestricted fares that accounted for a significant percentage of their profits.þþAmerican lost two planes and 17 crew members on Sept. 11. While employees mourned the loss of their co-workers and the United States reeled from the attacks, AMR Chief Executive Don Carty cut 20,000 jobs as the sharp drop in air travel turned the company's financial woes into a crisis.þþTwo months later, just as air passengers started to trickle back, American Flight 587 crashed after taking off from New York's Kennedy Airport, killing 265 people. The airline's workers mourned for more lost colleagues, while its managers went to New York again to console victims and investigate the incident.þþThen Briton Richard Reid attempted to explode a bomb hidden in his shoe on American Flight 63 from Paris in December 2001 in the most visible terrorist threat to a commercial airline after Sept. 11. þþEXODUS REVISITEDþþAmerican missed out on receiving money from a federal loan guarantee program to help carriers recover from Sept. 11 when the government said the company's financial situation was not dire enough to meet the criteria, airline officials said.þþMeanwhile American kept losing money. It lost $1.76 billion in 2001 and then chalked up an industry record loss of $3.51 billion in 2002. The top eight U.S. carriers posted a net loss $7.5 billion in 2001 and $11 billion in 2002.þþThere were bright spots for American.þþIts performance record improved. It expanded the use of automated check-ins and electronic ticketing and allowed customers to use their own computers to print their boarding passes. These changes should save about $2 billion in annual operating costs.þþBut the bad news and bad luck kept coming.þþThe war in Iraq helped push American onto the verge of bankruptcy by splashing frigid water on already tepid demand for travel.þþThe airline has fewer flights to Asia than some rivals, but as luck would have it, images of an American Airlines jet on the tarmac in San Jose, California, during a SARS scare earlier this month were shown on live network TV. No one on the plane had the flu-like virus, and the incident was a false alarm. But so far, only an American plane has had such a high-profile quarantine at a U.S. airport.þþMeanwhile, the odds on the carrier winning approval of the labor deals have been shifting. Union leaders have indicated it may be difficult for workers to accept concessions without additional terms that would benefit the rank and file when business improves for the slumping airline industry.þþWhile market forces and the mechanisms of its employee base buffet American, it seems that Mother Nature also has had it in for the airline.þþA few days after striking the tentative deals, a severe storm hit near American's home in the Dallas-Fort Worth area. It left the cities' downtowns mostly untouched, but hail nearly the size of golf balls damaged 59 American aircraft at the DFW International Airport.þþ``The bad news is, we had hail damage,'' Carty joked in a recent address to employees. ``The good news is that according to the Book of Exodus, we missed the Red Sea and the plague of frogs. The other bad news is that we have locusts still to come.'' þþ
Source: NY Times
