American Airlines On Final Approach?
MIAMI (CBSMiami.com) – American Airlines stock rebounded somewhat Tuesday after analysts said they don’t envision the company running out of money – or filing for bankruptcy – at least not any time soon.
American’s stock plunged to a nearly nine-year low on Monday, closing at $1.98 a share, amid reports that pilots are fleeing to retirement in large numbers for fear of a total stock collapse or bankruptcy filing.
The Allied Pilots Association, representing American’s pilots, issued a statement Tuesday saying many pilots are opting to retire now given a clause that permits them to cash in stock options at prices 60 days old.
The APA’s statement said the company’s declining stock value has “likely prompted a number [of pilots] to decide that now is a good time to conclude their careers.”
The possibility of American filing for bankruptcy left many of its nearly 10,000 South Florida employees worried and angry.
Pilots, flight attendants, mechanics and others have given up pay and benefits over the years to help keep the airline solvent.
“In 2003 we wrote a check for $2 billion dollars to this company – annually – to make the concessions necessary to keep the company out of bankruptcy,” said Randy Trautman, chairman of the Association of Professional Flight Attendants in South Florida.
Flight attendants and pilots have blamed lousy customer service, delayed flights, lost luggage and mismanagement for the airline’s descent. They have also been critical of executive compensation.
“In 2005, 2006 and 2007 they put $300 million, the top executives, put $300 million in their pockets. That’s mismanagement,” Trautman said.
American CEO Gerard Arpey received $5.2 million in compensation in 2010, an 11% increase over the year before. At the same time, his company lost nearly half a billion dollars.
American is the only major carrier that lost money last year, and the only one losing money this year.
At Miami International Airport some passengers decried the hefty pay for American’s bosses, and wondered how the company could be losing such huge sums of money.
“It doesn’t seem quite right, does it?” said Kristin Lepate. “It makes you kind of mad as a consumer that fares go up and fees and everything. It cost me to bring my baby on my lap on the plane today,”
American issued a statement on its future Tuesday saying, “Regarding rumors and speculation about a court-supervised restructuring, that is certainly not our goal or our preference. We know we need to improve our results and are keenly focused as we work to achieve that.”
Miami International Airport issued a statement saying it is encouraged by analysts down-playing the possibility of an American bankruptcy and said the airline “has paid and is paying its bills on time.”
MIA’s statement also said Miami serves as one of American’s busiest, most profitable hubs and that should a bankruptcy occur, it’s unlikely there would be any reduction in service here.
Should American file for bankruptcy protection, passengers would most probably notice little if any difference. Employees would probably take it on the chin. Owners of American stock and bonds would lose their investments.
At the end of trading on Tuesday, AMR’s stock had risen to a closing price of $2.39 a share.