S&P downgrades American Airlines bond rating (AP) =97 Standard & Poor's on Friday further downgraded American Airlines'= =20 non-investment grade credit rating, citing the growing worry that the=20 world's largest air carrier could file for Chapter 11 bankruptcy protection= =20 in the coming months. S&P lowered the long-term corporate credit ratings=20 for Fort Worth-based American and its parent company, AMR, to "B-" from=20 "BB-". It also revised the CreditWatch implications on those ratings to=20 "developing" from "negative." A lower credit rating generally increases the= =20 interest rate that a company must pay to borrow money. AMR's shares fell=20 nearly 7 percent on the New York Stock Exchange on Friday, closing at=20 $2.34. Philip Baggaley, an S&P credit analyst, said the airline's=20 continuing heavy losses, shrinking cash reserves, threat of war in the=20 Middle East and difficulties in negotiating financial concessions from its= =20 labor unions figured into the downgrade. "Any war between the U.S. and=20 Iraq, a prospect that has already raised airline fuel prices, would cause a= =20 further erosion of revenues and raise already high fuel costs (at least for= =20 awhile), widening the company's losses," Baggaley wrote. Earlier this week,= =20 a local official at American's pilots union said the airline could be in=20 bankruptcy court by the end of May. That timetable was later disputed by=20 the union itself. But American raised the specter of Chapter 11 as part of its effort to=20 wring $1.8 billion in annual concessions from employees. That figure adds=20 up to roughly 20 percent of American's labor expense last year. Analysts=20 have said American has enough liquidity =97 $1.9 billion at the end of 2002= =97=20 to operate until late summer, assuming a spring boost in passenger traffic= =20 and that a war with Iraq doesn't cut back leisure travel. Donald Carty,=20 American's chairman and chief executive, has been pushing for the federal=20 government to help the airline industry, particularly in the event of war=20 against Iraq. S&P noted that airlines have historically had trouble getting= =20 labor concessions without a bankruptcy filing, but said American's chances= =20 of success could be enhanced by the severe pay and benefits reductions=20 recently instituted at United Airlines, which is currently reorganizing=20 under Chapter 11 protection. US Airways is also restructuring in bankruptcy= =20 court. If concessions are not obtained, S&P said American's lenders would=20 not be likely to revise the carrier's credit terms to ease its repayment=20 schedule. In that case, American would probably opt for a bankruptcy=20 filing, the ratings agency said. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@escape.ca Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.dbombo.net/muddyangels/ TnT Webdirectory: http://search.co.tt *********************************************************