CEO sketches grim situation for American Airlines

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CEO sketches grim situation for American Airlines

DALLAS (AP) =97 Amid turbulence in the airline industry, employees of the=20
world's largest carrier are getting a firsthand account of economic woes=20
from their chief executive, who says he needs their help to stay=20
financially viable. American Airlines Inc. chief executive Don Carty is=20
meeting with employees this week and next week to discuss the company's=20
financial status.
The meetings come as the carrier's biggest competitor, United Airlines,=20
tries to stave off bankruptcy. Carty wants to cut $4 billion in annual=20
costs, and American's management team has found about half that total. The=
=20
carrier hopes to persuade its labor unions that concessions are critical to=
=20
American's long-term survival. American is in mediated contract talks with=
=20
its pilots, but it hasn't yet started formal discussions with any of its=20
unions about concessions. The Fort Worth, Texas-based airline lost almost=20
$3 billion from January through September, and some analysts project it=20
will lose $588 million in the current quarter.
But American's situation isn't as dire as United's. American has cash and=20
assets on hand worth more than $2 billion.

By late Thursday, United hadn't filed for Chapter 11 bankruptcy. Analysts,=
=20
however, say it is inevitable that the nation's No. 2 carrier will seek=20
protection after failing to secure a $1.8 billion federal loan guarantee.=20
Carty has said American doesn't plan to head down that road, a statement he=
=20
repeated in two meetings with employees Wednesday at Hyatt DFW hotel.=20
Similar sessions are scheduled next week at the airline's headquarters in=20
Fort Worth, at its hub in St. Louis and in New York. The two-hour meetings=
=20
feature a presentation showing American's weakened finances followed by=20
questions and answers. Some of the questions have been tough, but the tone=
=20
hasn't been adversarial, said American spokeswoman Andrea Rader. "Don=20
thought it was very important that people understand just what the=20
magnitude of the problem is, what we're going to do about it and what the=20
long-term future of the airline is," she said in Friday's editions of The=20
Dallas Morning News. Analysts say American could benefit from United's=20
problems, especially if its passenger numbers start to decline. United,=20
which shares a hub with American in Chicago, also is expected to pare its=20
schedule, which could benefit American.


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