American checking on up to $2 billion bankruptcy financing, sources say CHICAGO/DALLAS (Reuters) =97 Flight attendants at American Airlines said=20 bankruptcy could come sooner rather than later, and a source familiar with= =20 the matter said Monday the carrier was inquiring about securing up to $2=20 billion in special bankruptcy financing. Several sources familiar with the= =20 matter told Reuters that American, a division of AMR Corp., has begun talks= =20 on Wall Street about lining up special bankruptcy loans called=20 debtor-in-possession financing. One source said the world's largest airline= =20 is seeking $2 billion to start, although that number could change. "They're= =20 starting out with a very high, unreasonable expectation to raise $2=20 billion," the source said. "The United DIP was a tough enough one and they= =20 (United) had a much better package of collateral." UAL Corp's United=20 Airlines, the world's second-largest carrier, filed by bankruptcy in=20 December 2002. US Airways Group entered bankruptcy protection in August. At= =20 the time it was the sixth-largest U.S. airline but has since been replaced= =20 by Southwest Airlines. At the year-end, AMR reported a cash position of=20 $2.7 billion, of which $775 million was restricted. Since the Sept. 11=20 attacks, U.S. airlines posted billions of dollars in losses as passenger=20 traffic fell, and industry analysts believe the situation will get worse if= =20 there is war with Iraq. "We are simply not going to comment on every rumor or every bit of=20 speculation about American Airlines," spokesman Todd Burke said. "We have=20 said our losses are not sustainable and we have also said we need to remove= =20 $4 billion in operating costs in our company. American's Chief Financial=20 Officer Jeff Campbell said at the end of 2002 the airline's access to the=20 capital markets remained "somewhat uncertain," and he listed unencumbered=20 aircraft at $2.9 billion, down from $4.2 billion at the end of the third=20 quarter, 2002. Like United, American has a lucrative frequent flyer program= =20 and Citibank offers an American Advantage credit card that gives the card=20 holders mileage based on the amount of their purcahses. Airlines sell miles= =20 to the banks via long-term contracts. The banks then use the miles as=20 incentives for credit card holders, generating fees and a portion of net=20 income for the banks. In an unusual deal Bank One put up $300 million in=20 its own separate DIP financing for the UAL Corp. transaction backed by the= =20 credit card assets. It also took an equal part in the rest of the $1.2=20 billion United DIP along with three other institutions: Citibank, J.P.=20 Morgan Chase & Co and CIT Group. FLIGHT ATTENDANTS' WARNING The Association of Professional Flight Attendants "has reason to believe=20 that the timing for an AMR bankruptcy may be sooner rather than later,"=20 President John Ward said. He also said the union plans to meet with airline= =20 management to discuss a relief package for the carrier.Ward, head of one of= =20 the three major unions at American, said in a communication with members=20 over the weekend that it is in the best interest of his union to do=20 everything possible to avoid a bankruptcy of American parent company, AMR=20 Corp. "This certainly is not a position we would choose to be in. However,= =20 the situation is what it is and an AMR bankruptcy filing would only make=20 this difficult situation worse," Ward said. Ward and other APFA leaders=20 were holding meetings in the Dallas area and were not available to offer=20 more information about the timing of a possible bankruptcy. "American has stated that time is of the essence and it is committed to=20 working with its union leaders and employee groups to quickly find mutually= =20 acceptable solutions to its situation," Burke said. AMR shares were off 39= =20 cents, or about 14 %, to $2.42 on the New York Stock Exchange. In February= =20 American asked its employees to accept $1.8 billion in concessions. The=20 company is losing about $5 million a day. Carty said in a communication=20 with American employees over the weekend that he thought the company's goal= =20 in annual wage reductions was achievable and would make the airline a=20 strong competitor in the industry. "I think it's clear to everyone that we do face very, very tough choices,"= =20 Carty said."Our goal is to get our costs down to competitive levels, to=20 offer fares competitive with the low-cost carriers, and then to best them=20 all with a superior product and people," Carty said, adding this idea is a= =20 part of a new marketing campaign. All three of the major unions at American= =20 have said they are meeting the carrier's call to consider wage concessions,= =20 which analysts said were essential if the airline wants to avoid bankruptcy. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx 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.tha.gov.tt/ TnT Webdirectory: http://search.co.tt *********************************************************