American on the edge

American Airlines was on the brink of bankruptcy last night after members of the flight attendants' union rejected demands for deep pay cuts and other concessions.

The airline gave the union another 24 hours to persuade its members that the cuts are a better option than the prospect of a bankruptcy filing. Members will be able to change their minds, which could alter the outcome of a narrowly contested vote.

The flight attendants have been asked to cut their wages by 15.6% to save American $340m a year. The company is also looking to cut 2,000 flight attendant jobs.

Earlier yesterday unions representing pilots and ground workers, including mechanics, had approved the proposals put forward by management. American, which lost $3.5bn last year, is aiming to save a total of $1.8bn in labour costs.

The airline is world's largest carrier and would be the biggest ever bankruptcy in the industry if it fails to reach agreement with the flight attendants. "This is our last chance to avoid bankruptcy," said Don Carty, chairman of American parent AMR Corporation.

But analysts still expressed some belief that American could yet avoid the ignominy of bankruptcy for technical reasons related to the voting.

The pilots and ground workers unions both allowed members to alter their votes as the process went on.

That meant that members who had voted early could change their minds as the negotiations progressed and management sweetened the deal on the table.

The flight attendants' union had not allowed its members to change their minds until now and that could prove crucial to reversing the result. The Association of Professional Flight Attendants said 9,842 workers voted against the proposed concessions, while 9,309 voted in favour.

Pilots voted 69% in favour of accepting the cuts. The Transport Workers' Union, covering ground workers including mechanics and baggage handlers, voted 53% in favour.

"There is no upside to bankruptcy," said pilots' union president John Darrah.

Despite two of the unions passing the proposals, many workers complained bitterly at the depth of the cuts. At packed meetings, they expressed anger over the length of the deals - six years - and the small raises on offer in later years.