AMR May Still File for Bankruptcy
Thursday May 15, 2:41 pm ET
CHICAGO (Reuters) - American Airlines said on Thursday it may still have to file for bankruptcy, even after reaching deals with more than 100 suppliers, aircraft lessors and other creditors that will save it more than $175 million a year.
The world's largest airline, a unit of AMR Corp. (NYSE:AMR - News), narrowly averted bankruptcy three times last month and has been scrambling to restructure its costs out of court.
The airline said it expects the latest agreements to generate cumulative savings of more than $1 billion.
The deals, which the carrier disclosed in a U.S. regulatory filing, mark the final piece of the company's goal of reducing overall costs by $4 billion a year.
American previously had identified about $2 billion in annual cost savings. Last month, its three major unions agreed to concession packages totaling $1.8 billion.
"We continue to move through the most challenging period in our history, and our success is still far from assured, but reaching these cost-reduction agreements with our suppliers, lessors, and creditors is another step forward and further strengthens AMR as we seek to put the company on a solid financial footing," the company's new Chief Executive Gerard Arpey said in a statement.
AMR shares rose more than 15 cents initially on the news, but retreated 14 cents lower to $6.90 on the New York Stock Exchange (News - Websites) at mid-afternoon.
The company's filing with the Securities and Exchange Commission (News - Websites) also showed that AMR granted 37.9 million stock options to its unions on April 17 at a strike price of $5. With the stock currently trading near $7 a share, that's a gain of about $76 million.
The carrier said it will issue up to 3 million shares of common stock to suppliers, lessors, and other creditors in exchange for the new agreements. (Additional reporting by David Bailey and Chris Stetkiewicz) |
