AMR Tumbles After Pilot Contract Proposal

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    Titans26 Silver Member

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    AMR Tumbles After Pilot Contract Proposal
    By Mary Schlangenstein

    American Airlines parent AMR Corp. (AMR) tumbled the most in six weeks in New York trading after trying to end a five-year stalemate with a contract proposal that offers pilots smaller pay increases than they had sought.

    The Allied Pilots Association said today it was reviewing the plan as its board began a three-day meeting, and declined to comment further. Fort Worth, Texas-based American urged the union to permit members to vote on the offer, saying it was “time to close this chapter.”

    The two sides are split over compensation and the extent of flying that other carriers might do for American. With AMR directors gathering tomorrow for their last scheduled session of 2011, the lack of a pilot accord to help cut costs rekindled speculation the company may seek bankruptcy protection.

    “We regard the achievement of competitive pilot wage and benefit levels as key to American’s long-term survival,” William Warlick, a credit analyst at Fitch Ratings in Chicago, said in a report today. He said a contract on terms similar to American’s plan is “essential if the carrier is to move toward a sustainable operating profile in 2012 and beyond.”

    AMR dropped 11 percent to $1.91 at 1:20 p.m. in New York after dropping as much as 13 percent in the worst slide since Oct. 3. The shares plunged 73 percent this year through yesterday.

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