American Airlines, the world's largest airline and a unit of

AMR

(AMR)

, again sits on the brink of bankruptcy, with its fate in the hands of employees.

Sometime in the next 24 hours, 74,000 of the carrier's 100,000 employees will make a tough decision on whether to accept $1.8 billion in annual labor concessions. They can either vote to cut their own salaries by 20% in order to give the company a chance to reorganize outside of Chapter 11, or they can balk at management's plan to cut labor costs and have their pay cut by a bankruptcy judge.

"Voting 'no' is a vote for bankruptcy. Voting 'no' is a vote for additional job cuts," said CEO Donald Carty, in a town hall meeting with employees last week.

But while rejection would likely cause American to file for bankruptcy, paving the way for the kind of reorganization from which U.S. Airways recently re-emerged, approval offers no assurances that a Chapter 11 filing won't happen.

Indeed, on Monday afternoon, reports surfaced that American Airlines had assembled the $1.5 billion it needs in debtor-in-possession loans in order to file for bankruptcy, suggesting such a filing could happen as soon as this week. The company wouldn't comment on the rumors, but shares fell 6.7% to $3.08 on the news.

While American prepares financing for its worst-case scenario, labor unions have begun asking for more time. On Monday, 34,500 ground workers and mechanics represented by the Transport Workers Union said they would push back their voting deadline until Tuesday at 10 a.m. EDT, because of technical problems in the voting process. Similarly, the 13,500 pilots represented by the Allied Pilots Association pushed their deadline to 10 a.m. EDT Tuesday.

Losses have been mounting fast at American in the two weeks since unions tentatively agreed to cost-concessions. Not only has the war driven down travel demand by as much as 40% in some international markets where American is a major player, but the outbreak of the SARS virus has ground lucrative Asian travel to a virtual standstill in places like Hong Kong.

"The industry seems to get hit with one crisis after another -- first, the weakened economy. Second, fears of terrorism. Third, the Iraq war, and now finally SARS," said Ray Neidl, airline analyst for Blaylock & Partners, in a recent report. He concluded that "even if all of these problems were to go away, the network carriers would still face continuing aggressive infringement" from low-cost rivals like

Southwest

(LUV) - Get Report

.

The quadruple whammy of events is one reason why Neidl and other analysts expect first-quarter airline earnings to be even worse than expected when

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Continental Airlines

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becomes the first to release on Tuesday, followed by

Northwest Airlines

(NWAC)

and

Delta Air Lines

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.

Current Wall Street estimates maintain the industry will lose $3.5 billion in this coming quarter, some 40% worse than their original estimates, and $200 million more than the industry lost in the quarter immediately following the Sept. 11 terrorist attacks.

In the end, as with employees at

UAL

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-unit United Airlines, the cuts American's employees are voting on could be too little, too late to offer much benefit to investors in AMR stock or bonds.

"If

American does get the agreements, it would come at a price with potential dilution of stock and generous profit sharing," said Neidl. "For AMR, there would be a further drain on future earnings in that employees would be eligible for up to 15% of any pre-tax profits over $500 million."