Worst May Be Over for American Airlines, CEO Says
AMR Corp. Chief Executive Gerard Arpey, buoyed by a recent increase in bookings and decreasing fuel prices, predicted Thursday that American Airlines’ disastrous first-quarter loss would be the low point as the company strives to move from the brink of bankruptcy.
Arpey also said he was confident that the world’s largest airline would win cost reductions from suppliers and companies from which it leases planes, providing the last of $4 billion in annual savings needed to avoid being forced to seek Chapter 11 bankruptcy protection.
“I believe, sitting here today, it will represent the low point,” he said of the carrier’s $1.04-billion first-quarter loss.
Arpey took over as chief executive April 24 after Don Carty resigned under fire after the disclosure of special executive retention bonuses and pension benefits just as unions were being asked for huge pay cuts. The unions last month agreed to $1.8 billion a year in concessions. AMR also found $2 billion in yearly savings by taking such steps as grounding jetliners.
Arpey wants to complete negotiations with suppliers before June 30, when covenants on American’s $834-million bank loan require it to have a minimum of $1 billion in unrestricted cash and short-term investments, he said. The carrier has warned that it might be unable to meet the requirement.
“Our future is uncertain,” Arpey said. “However, just in the past two weeks there are some positive signs for our company and for our industry.”
AMR stock fell 1 cent Thursday to $6.40 on the New York Stock Exchange.
Bloomberg News was used in compiling this report.