Updated from 12:18 p.m. EDT
Flight attendants for American Airlines voted in favor of a $340 million concession package that may keep the troubled carrier out of bankruptcy.
The vote reversed one taken Tuesday, in which the attendants rejected a proposal calling for layoffs among the 26,000 attendants and cuts in wages and benefits. Ground workers and pilots already have approved their concession packages.
American, the world's largest airline, said it would file for bankruptcy if the concessions weren't approved.
rallied Wednesday in anticipation of a new vote, as investors bet that the company would be able to get wage concessions from its flight attendants and avoid a bankruptcy filing. Meanwhile, the depth of the problems the industry faces surfaced in
In regular trading AMR's shares rose 83 cents, or 24%, to $4.23. They added an additional 12.5% after hours.
The parent company of American Airlines has been on a roller-coaster ride for the past several sessions, whipped around by the results of union votes that are crucial to its ability to stay out of Chapter 11.
The shares got a boost Tuesday when unions representing pilots and groundworkers ratified new contracts, but faced pressure again when the flight attendants union rejected a similar measure by about 500 votes. That pressure never materialized, however, as the stock remained halted Tuesday afternoon. By Wednesday a consensus of opinion had emerged that the contract would still pass.
Several analysts anticipated that the flight attendants would end up approving the contract in a second ballot. Said Credit Suisse First Boston: "We have moved slightly toward a position that expects AMR to avoid a Chapter 11 filing. For months now, we had viewed the outcome as too close to call."
The 26,000-member Association of Professional Flight Attendants on Tuesday rejected a contract that included a 15% pay cut. About 7,000 members who didn't vote in the first round were eligible to vote in the second one, part of the reason analysts expect approval this time around.
The Fort Worth, Texas, airline has made it clear that if all three unions don't pass the new contract, which seek about $1.8 billion in annual savings, it would be forced into bankruptcy.
At Northwest, the first-quarter loss swelled to $396 million, or $4.62 a share, from a loss of $171 million, or $2.01 a share, last year. The airline did manage a slight revenue gain, up 3.2% to $2.25 billion. The results reflect a $20 million charge for severance and another $60 million charge for pension curtailments, both the result of layoffs caused by reduced demand.
"While Northwest Airlines continued to manage its costs aggressively during the quarter, the travel downturn that began some two years ago has further deteriorated due to the war and shows no signs of improving," the company said in a statement.
Northwest said that starting in late March, it was forced to cut systemwide available seat miles, a measure of capacity, ground about 20 planes and cut 5,000 people from its workforce.
"Because we believe that revenues will not recover to historical levels, we are continuing to address costs in every area of the operation," the company said. "As labor is the single biggest expense of running Northwest, we are now conducting discussions with each of our unions concerning cost restructuring."
The cost problem remained evident in the first quarter. While revenue rose 3.2%, operating expenses increased 8.4%, primarily as a result of higher fuel prices and unusual items. Northwest's operating cost per seat mile rose 5.2% from a year ago. Excluding the unusual items and fuel, unit costs decreased 3.1%.