- CHICAGO (Reuters) - The war
in Iraq could claim its first major U.S. airline casualty as American Airlines
was stepping up talks that could lead to a bankruptcy filing as early as
next week, sources familiar with the matter told Reuters on Thursday.
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- American, a unit of AMR Corp. AMR.N , has intensified
its preparations for a Chapter 11 filing as bookings have been "terrible"
since the Iraq war started, one banking industry source said. "It's
a liquidity imperative to file as soon as possible," the source said.
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- Two major U.S. airlines, United and US Airways, are already
in bankruptcy protection, along with a smaller carrier, Hawaiian Airlines
HA.N .
-
- 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 .XAL fell 3 percent to 30.45.
-
- The sources said American Airlines was in talks to secure
some $1.5 billion in financing for possible bankruptcy. The airline has
given itself until March 31 to reach deals with unions. "Timing-wise,
that's not going to happen," said the source, who declined to be named.
-
- American spokesman Todd Burke said speculation on a bankruptcy
filing has been rampant for weeks and the airline was doing everything
possible to avoid such a move.
-
- 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.
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- LOSSES SNOWBALLING
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- AMR, 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.N 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
UAWGQ.OB , 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.
-
- Australia's largest airline, Qantas Airways Ltd QAN.AX
, said it was slashing its international service by up to 20 percent to
mid-July because of a drop-off in demand from the Iraq war. The airline
also said it would not meet profit expectations for the full year.
-
- 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.
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- VIRUS ADDS TO WOES
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- In Europe, Air France AIRF.PA , British Airways BAY.L
, and Germany's Deutsche Lufthansa LHAG.DE , all have cut flights because
of the war.
-
- The spread of a mystery virus added to market woes for
Asian airlines. A deadly flu-like virus spread partly by air travelers
has caused trips to be canceled in Singapore, Hong Kong and southern China.
-
- Asia's largest carrier, Japan Airlines System Corp. 9205.T
, 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 0293.HK 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.
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