The future of American Airlines could be decided today as labour groups reveal their decisions on concession deals aimed at staving off bankruptcy at the world's largest carrier.
American, a division of AMR Corp, said it would file for bankruptcy if any of its three main unions did not ratify the concession deals aimed at saving the carrier $1.8 billion a year in labor costs. All voting results are due by 4 p.m.
Union members have expressed anger at the deals that will cut pay for several major groups by between 15 per cent and 23 per cent. They said the almost six-year concession agreements do not include significant provisions to bump up their pay if the carrier returns to profitability.
A source said last night that American has almost wrapped up $1.5 billion in debtor-in-possession (DIP) financing, should it file for bankruptcy. The potential DIP lenders are the lead bank, Citibank, along with J P Morgan Chase & Co, Merrill Lynch and CIT Group, the source said.
If Fort Worth, Texas-based American files for Chapter 11 protection, Citibank will put up $750 million in a special credit-card backed DIP - similar to what Bank One United Airlines last December.
The four lenders will take equal part in the remaining $750 million of financing. The total DIP loan can be increased to $1.75 billion, if necessary, upon a special vote, the source said.
Sources have said American's management remains committed to the idea that the airline can restructure outside of bankruptcy court if workers go along, even though others are sceptical.