Fri, May 16, 2003
Creditors to Help Airline Survive Outside Chapter 11
AMR Corp.
reached another major milestone in its long-term cost restructuring
efforts Thursday with the announcement that it has completed
agreements on concessions with more than 100 suppliers, aircraft
lessors, and other key creditors that will save AMR in excess of
$175 million a year. These agreements will generate cumulative
savings for the company of more than $1 billion.
A billion here, a couple billion there -- pretty soon it's
'real money'
During the past two years, AMR has identified approximately $2
billion a year in cost savings through a wide range of initiatives,
and last month AMR's three major labor unions ratified new
agreements which, when coupled with changes in pay plans for
management and non-union employees, will reduce AMR's costs by an
additional $1.8 billion a year.
The final piece of AMR's overall $4 billion-a-year
cost-reduction effort was to reach agreement on meaningful
concessions with AMR's suppliers, lessors, and other creditors.
"We are grateful to each supplier, lessor, and creditor who
tangibly expressed support for our company by granting these
significant concessions," said AMR Chief Executive Officer and
President Gerard J. Arpey. "We continue to move through the most
challenging period in our history, and our success is still far
from assured, but reaching these cost-reduction agreements with our
suppliers, lessors, and creditors is another step forward and
further strengthens AMR as we seek to put the company on a solid
financial footing."
To Pay With Stock
In a move that's not really designed to lift the spirits of
AMR's present stockholders, AMR will issue up to three million
shares of common stock to suppliers, lessors, and other creditors
to enable them to share in the upside of the company's future in
return for their support of AMR's cost reduction efforts.
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