The war in Iraq was close to claiming its first major US airline casualty as American Airlines stepped up talks to secure US$1.5 billion in financing for a bankruptcy filing that could come as early as next week, sources familiar with the matter said on Thursday.
American, a unit of AMR Corp, has intensified its preparations for a Chapter 11 filing as bookings have been "terrible" since the Iraq war started, one source said.
Two major US airlines, United and US Airways, are already in bankruptcy protection, along with a smaller carrier, Hawaiian Airlines.
Shares of AMR, the world's largest airline, plunged 18 percent on news of the possible filing, ending down US$0.40 at US$1.79 on the New York Stock Exchange. The stock has lost more than 90 percent of its value since the Sept. 11, 2001, hijackings.
Other US airline shares also fell as renewed indications the war would not be short-lived weighed on the beleaguered sector. The American Stock Exchange's airline index .XAL> fell 3 percent to 30.45.
The Air Transport Association said on Wednesday bookings on some international routes from the US were off more than 40 percent and on US domestic routes were down 20 percent for the next two or three months.
Meanwhile, UAL Corp's United Airlines, already in Chapter 11 bankruptcy protection since December, reached a tentative cost-cutting deal on Thursday with its highest-paid union workers, the pilots. Details were not immediately available. The pilots are currently working under 29 percent interim pay cuts.
Shares of another bankrupt carrier, US Airways Group, dropped as the No. 7 US airline announced its own series of war-related service cuts amounting to about 4 percent of its flight schedule.
The cuts were just the latest to emerge from airlines around the globe, but mostly in the US, as the Iraq war wreaks havoc on an already bleeding industry.
In Europe, Air France also cut its flight schedule, cutting capacity for next month by 7 percent and postponing seven new aircraft deliveries.
British Airways cut its April and May flights by 4 percent Wednesday and brought forward plans to axe 3,000 jobs.
In Asia, the spread of a mystery virus added to market woes for Asian airlines.
Cuts to flights in Asia reflected the additional impact of a deadly flu-like virus spread partly by air travelers that has caused trips to be canceled in Singapore, Hong Kong and southern China.
RSS