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AMR Confronts the Bears

Frizzell says a recent financing package, which produced $2.9 billion for American, was a breakthrough. "There has been a new energy by the entire leadership team, a new focus," he says. "Since the financing agreement, Gerard has become more determined than ever to make the company successful."

Still, it can be painful to imagine Arpey reading his morning newspaper.

Early this month, European Union regulators warned American and partners British Airways and Iberia that their bid for antitrust immunity may violate antitrust rules. Antitrust immunity enables carriers to jointly discuss pricing and scheduling with partners, something that Delta, United (UAUA) and Continental (CAL) already do. American's bid for immunity requires approval by U.S. and European regulators.

"It's hard to understand why American should have restrictions that somebody else doesn't have," McAdoo says. "That doesn't make any sense."

In September, Japanese media revealed that Delta was negotiating to invest in Japan Airlines and to replace American as JAL's partner. As the only one of the three largest U.S. airlines without a Tokyo hub, American relies on an alliance with JAL to connect passengers in Tokyo. Delta's move traps Arpey. If American is fortunate, it will spend hundreds of millions of dollars to maintain a relationship it already has. If American is unfortunate, it will lose the relationship.

In August, Delta and US Airways (LCC) said they would trade slots and other assets, giving Delta a stronger presence at New York's La Guardia Airport. "American's dominance in New York has eroded," Mann says.

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