This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx Strategy Split Is Reported in Top Ranks of American March 29, 2003 By EDWARD WONG Executives at American Airlines are divided on whether to file for bankruptcy protection, though the company is still asking bankers to put together financing as quickly as possible in case it decides to do so, one banker who had been briefed on the discussions said yesterday. The banker said executives at the airline, the world's largest, had basically fallen into two camps. Donald J. Carty, the chief executive of AMR, parent of American Airlines, and several colleagues want desperately to avoid bankruptcy and would rather work out labor and supplier concessions outside of court, he said. But executives close to Mr. Carty were arguing that no matter what American does, no matter what labor concessions it wrings out now, there is no way to avoid seeking Chapter 11 protection from creditors because of the bleak industry outlook, he said. "They're looking at both options very closely," the banker said. "It's tough, though. The war hasn't helped American, United or any of the other airlines." On Thursday, two bankers said that American might file for bankruptcy protection as early as next week because of the steep decline in revenue. But with the executives still divided, the timing seems uncertain now, one banker said. Another person briefed on the discussions said American was not having a problem raising financing, because it has enough assets to offer as collateral. Bankers say that American is trying to put together more than $1.5 billion in debtor-in-possession financing that would allow it to keep operating if it filed for bankruptcy protection. The lenders involved are Citibank, which issues American's frequent-flier credit card; J. P. Morgan Chase; and the CIT Group, they said. Citibank, a unit of Citigroup, would be the lead lender. One banker said yesterday that GE Capital, the financing arm of General Electric, might also provide financing. An official at GE Capital, however, said he was not aware of any financing talks. American had $2.7 billion in cash at the end of last year, with $775 million of that restricted. It reported then that it was using up $5 million a day. Since then, passenger traffic in the industry has dropped significantly because of the start of the war in Iraq, and American has been forced to cut its capacity. The company is negotiating with all its labor groups for $1.8 billion in annual wage, benefit and work rule concessions. Negotiators for the pilots are expected to present a concession package worth $660 million to union leaders, who will probably vote on the cuts before Tuesday. If they approve the package, the membership will then vote on it. Todd Burke, a spokesman for American, said that the Association of Professional Flight Attendants presented a concession package to airline officials yesterday afternoon. Mr. Burke declined to talk about details of the proposal, but said the company was looking for $340 million a year in cuts from its flight attendants. "We are now in the process of jointly costing out the proposal to determine whether it meets the cost targets established," he said. On Thursday, American and the Transport Workers Union reached a tentative agreement on concessions for the airline's 16,300 baggage handlers. The baggage handlers form the largest of eight labor groups represented by the T.W.U. Mr. Burke said American was still in talks with the other T.W.U. groups. Earlier this week, the pilots accused American of negotiating in bad faith after the company said it might have to lay off 1,000 pilots. The company said it had already warned the union of those layoffs in previous talks. US Airways, which is expected to emerge from bankruptcy protection on Monday, received approval yesterday from a bankruptcy judge to replace its pilot pension plan with a less costly one. The Pension Benefit Guaranty Corporation, the federal agency with oversight of corporate pension plans, also approved the plan yesterday. US Airways will put it into effect on Tuesday, though pilots have complained that it will drastically reduce their retirement benefits. http://www.nytimes.com/2003/03/29/business/29FLY.html?ex=1049956216&ei=1&en=b0536b0b6117ee93 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company