| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
American Air 'mulls bankruptcy'
CHICAGO (Reuters) -- The war in Iraq was close to claiming its first major U.S. airline casualty as American Airlines stepped up talks to secure $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. (AMR), has intensified its preparations for a Chapter 11 filing as bookings have been "terrible" since the Iraq war started, one source said. Two major U.S. airlines, United and US Airways, are already in bankruptcy protection, along with a smaller carrier, Hawaiian Airlines (HA). Shares of AMR, the world's largest airline, plunged 18 percent on news of the possible filing, ending down 40 cents at $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. Two of the four planes used were American Airlines' flights. Other U.S. 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 fell 3 percent to 30.45. The Air Transport Association said on Wednesday bookings on some international routes from the United States were off more than 40 percent and on U.S. domestic routes were down 20 percent for the next two or three months. Already in fragile financial condition with debt-laden balance sheets, U.S. airlines are ill-equipped to deal with such a dramatic downturn. Losses snowballingAMR, based in Fort Worth, Texas, posted a record $3.5 billion loss in 2002, nearly a third of the more than $11 billion in losses posted by the top eight U.S. carriers. Meanwhile, UAL Corp.'s (UAL) 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 that are expected to become permanent. Shares of another bankrupt carrier, US Airways Group, dropped as the No. 7 U.S. 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 United States, as the Iraq war wreaks havoc on an already bleeding industry. French newsIn Europe, Air France also cut its flight schedule, cutting April capacity by 7 percent and postponing seven new aircraft deliveries. Air France shares closed 5 percent lower at 9.25 euros. British Airways (BAY), whose shares closed down 4.7 percent at 112-1/2 pence, cut its April and May flights by 4 percent Wednesday and brought forward plans to axe 3,000 jobs. Shares in Germany's Deutsche Lufthansa (FLHA), which is also cutting flights and grounding planes, fell 1 percent to 8.42 euros. Virus shakes AsiaIn 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. Asia's largest carrier, Japan Airlines System Corp., joined global rivals by cutting its international flights for April by 8 percent on Wednesday. Shares in Japan Airlines closed down 2.8 percent at 248 yen in Tokyo on Thursday after Moody's Investors Service placed on review for possible downgrade senior unsecured long-term debt ratings at Japan Airlines Co. Ltd (JAL). JAL merged with Japan Air Systems last October to form Japan Airlines System Corp. Shares in Cathay Pacific Airways fell 4.6 percent to 10.50 Hong Kong dollars after UBS Warburg lowered its rating on the Hong Kong-based airline to "reduce" from "neutral," citing the impact of the mystery virus. "Only now are we beginning to feel the twin effects of travel avoidance typically associated with war and cancellations caused by a bout of Asia-originating respiratory disease," said Timothy Ross, UBS Warburg's Asian transport analyst. The outbreak of severe acute respiratory syndrome has been reported to have killed 50 people worldwide and made more than 1,300 sick. Global airlines have lost $30 billion in the last two years and risk $10 billion in losses from war in Iraq, the Geneva-based International Air Transport Association said. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
