The war in Iraq could claim its first major US airline casualty as American Airlines steps up talks that could lead to a bankruptcy filing as early as next week, sources said.
American, a unit of AMR, 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.
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 31st to reach deals with unions.
Two major US airlines, United and US Airways, are already in bankruptcy protection, along with a smaller carrier, Hawaiian Airlines.
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 per cent of its value since the September 11th, 2001, hijackings. Two of the four planes used were American Airlines' flights.
Other US 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 fell 3 per cent to 30.45.