This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx American Air Surges After Union Deal April 1, 2003 By REUTERS Filed at 1:39 p.m. ET DALLAS (Reuters) - Shares of American Airlines' parent, AMR Corp. (AMR.N), soared on Tuesday, a day after the world's largest carrier tentatively obtained major labor concessions, but analysts warned there was still a chance of a bankruptcy filing. American, whose shares jumped 39 percent at midday, reached last-minute deals with its three major unions on Monday to cut costs, helping the airline avert an imminent bankruptcy filing. ``We now assume that AMR can last through late fall, or perhaps through year end, even if its revenue environment remains stressed. AMR is not completely out of the woods, but the company has bought itself some time,'' said Mark Streeter, a credit analyst at J.P Morgan. Streeter said he saw a 20 percent chance of AMR filing for bankruptcy within the next year if the war in Iraq ends this month and 60 percent if the war lasts through the peak summer travel season. Union leaders said they were convinced the carrier's existence was at stake. ``None of us would have even considered supplying such relief if it were not clear beyond reasonable dispute that the company would secure far greater relief in bankruptcy, and that its very existence is in the balance,'' Gary Yingst, a senior member of the union representing American ground workers and mechanics, wrote on the group's Web site. Some analysts raised their ratings on the stock, saying the concessions will likely make it less painful for the airline to secure financing. But Morgan Stanley's analyst, William Greene, did not upgrade the stock, saying he was not convinced of its long-term viability. AMR has said it needed to cut structural operating costs by $4 billion a year to keep flying and asked employees for $1.8 billion in wage and benefit cuts. About 70,000 union members -- out of total company staff of about 100,000 -- at the airline must approve the pay cuts, which generally range between 15 percent and 20 percent for some of the largest groups. Voting should be completed by April 15. CEO TO TAKE 33 PCT PAY CUT The union concessions include $660 million in savings from pilots, $340 million from flight attendants, $620 million from ground workers and mechanics. The carrier also obtained $180 million in savings from management, support staff and reservation agents. AMR Chief Executive Don Carty will take a 33 percent base pay cut and decline a bonus for the third consecutive year, the company said. He will also that the value of compensation packages for him and other senior officers be reduced significantly. ``AMR is likely to avert bankruptcy, for now,'' wrote J.P. Morgan stock analyst Jamie Baker, who raised his rating to ``neutral'' from ``underweight.'' ``The AMR cost structure is significantly improved.'' AMR is still in a precarious financial state. Bookings have dropped substantially due to the Iraq war, and the airline is quickly using up its cash each day, probably at a level above the $5 million daily reported in the fourth quarter of 2002, analysts said. The stock rose 83 cents to $2.93 on the New York Stock Exchange. Shares were as high as $29 in March 2001 and fell as low as $1.28 a few days ago on fears of a bankruptcy. Separately, AMR notified the Securities and Exchange Commission on Tuesday it will delay filing its annual financial statement. It cited talks to reduce costs that also include aircraft creditors and vendors. AMR said it expects to conclude the talks soon. In a sign of how close American came to bankruptcy, talks for $1.5 billion in debtor-in-possession financing, led by Citibank Inc. (C.N), were nearly completed late Monday afternoon, a source familiar with the matter said. An AMR bankruptcy filing would be the largest ever in global aviation history and would follow similar actions by its next biggest competitor, UAL Corp.'s United Airlines (UAL.N), and No. 7 carrier US Airways Group Inc. (UAWGQ.OB) in 2002. AMR posted a record $3.5 billion loss in 2002. Since the beginning of the Iraq war, all airlines have seen bookings plummet, especially on international routes. http://www.nytimes.com/reuters/business/business-airlines-american.html?ex=1050231215&ei=1&en=56d0194405122759 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