Updated from 1:12 p.m.

American Airlines flight attendants voted against a key wage-cut plan Tuesday, but the union reportedly decided to reopen voting until late Wednesday.

Two of the three unions at American Airlines, a unit of

AMR

(AMR)

, had agreed to the wage plan that would cut their pay by 20% and help stave off bankruptcy, but the flight attendants couldn't be convinced, meaning that a Chapter 11 filing looked imminent.

AMR shares were halted in afternoon trading. They last traded at $3.40, up 32 cents, or 10.4%, amid possible short-covering.

The company's 27,000 flight attendants, represented by the Association of Professional Flight Attendants, initially voted to reject the deal in a close vote after tentatively ratifying cuts two weeks ago. The flight attendants recently have grown displeased with AMR management, saying it hasn't cut executive pay as much as other employees' pay.

"After American Airlines had secured approval from the three labor groups to send these packages out for ratification, management rewarded itself with the least amount of the 'sacrifices' and the largest portion of the equity piece," said a labor source close to the negotiations. "They have continually changed the terms of the agreements over the past 96 hours."

Earlier in the day, more than three-fourths of the 13,500 pilots represented by the Allied Pilots Association approved cost cuts of 31% to 69%. Also, 25,000 of the 34,500 members in the Transport Workers Union voted to accept the wage concessions, with 53.3% in favor of the deal.

TheStreet Recommends

"To willingly take our airline and our company into bankruptcy would not be a better alternative," said John Darrah, president of the pilots union. "There is no upside to bankruptcy."

The Transport Workers Union said on its Web site, "There is no question that these agreements represent a major step backwards for our union. We made these agreements only because it is painfully obvious that the results of bankruptcy proceedings would have been far worse."

With the two unions on board by early afternoon, questions began to surface about how the company's flight attendants would vote. On Monday, the union asked for more time to vote because of technical issues and because there was a delay getting contracts out to employees, but American rejected the request. Both mechanics and pilots asked for a similar delay and were granted their request.

AMR had asked for -- and received -- $660 million in concessions from pilots, including 2,500 layoffs. It also got $620 million from mechanics and ground workers, with 1,400 layoffs.

Still, the industry's biggest airline appeared to be bracing for the worst: 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.

Even if all three unions ratify the agreement for $1.8 billion in annual labor concessions, AMR still would face hurdles, as its independent auditor has said it doubts the company's ability to continue as a going concern. Ernst & Young, in a letter dated from March 31, warned that the company's heavy losses, negative cash flow and uncertain operating costs could cause the company to violate liquidity requirements in operating agreements at a time when financial help would be scarce for the industry.

AMR lost $2.5 billion last year, and current industry trends suggest similar losses are in the cards for 2003.

As

Continental's

(CAL) - Get Report

earnings release suggested, a confluence of bad things -- from the outbreak of the SARS virus to the skyrocketing fuel costs due to the war in Iraq -- will keep industry business bad for the time being.