By Kathy Fieweger and Jon Herskovitz
CHICAGO/DALLAS (Reuters) - While American Airlines scrambled on Tuesday to avoid filing for bankruptcy, two smaller U.S. carriers reported mixed results showing an industry still in crisis.
Unions were still angry at the world's largest airline, a day after Chief Executive Don Carty gave a rare public apology over a gaffe involving executive compensation. Despite Carty's dramatic admission of bad judgment on Monday, union officials seethed that American failed to disclose special pension funding and bonuses for executives even as pilots, mechanics, flight attendants and other workers agreed to big pay cuts.
In a regulatory filing last week, the airline disclosed it had partially funded a long-existing pension trust that would be safe for 45 executives even in the event of bankruptcy. American also provided retention bonuses for select senior management.
Sources familiar with the matter said on Tuesday AMR's board is giving management one more chance to try to patch things up with unions, two of which have threatened to revote on big concession packages ratified last week.
The board will then consider what to do about a bankruptcy filing on Thursday, sources said.
"I wouldn't be surprised to see them go in (to Chapter 11) this week," said one source familiar with AMR's finances.
The Association of Professional Flight Attendants and the Transport Workers Union have gathered their boards for hurried meetings to mull their response to the controversy over the executive perks.
Flight attendants, who called last week for a new vote on already-ratified concession deals, are discussing the details of how to carry out that vote, a union spokesman said.
"Carty's apology does not change the fact that by withholding from APFA information about these bonuses and pension trust, it committed a material breach of its obligation to disclose all relevant information to us," APFA President John Ward said in a message after Carty spoke on Monday.
The board for the Allied Pilots Association -- the only major union at American that has not called for a revote -- is also meeting and a spokesman for the group has said a new ballot on concessions is one of several options on the table.
Last week, rank-and-file union members at American, based in Fort Worth, Texas, approved $1.8 billion in concessions to help keep the airline out of the court system.
CALLING MR. FIX IT
The pilots union said the ultimate responsibility to resolve the issue of executive bonuses clearly lies with AMR management.
"Don Carty and his management team created this problem and it is really up to them to fix it," said APA spokesman Andy Sizemore.
Shares of American parent AMR Corp.<AMR.N> continued to slide in Tuesday trading, dropping 10 percent to $3.46 on the New York Stock Exchange.
Meanwhile, AirTran Holdings Inc. <AAI.N> bucked the industry's loss trend with a modest first-quarter profit of $2 million, beating Wall Street's per share estimate by a penny despite what it called a "challenging economic climate."
Major U.S. carriers are on track to post about $3.5 billion in losses in the first quarter, a horrible performance as war in Iraq and fear of the deadly pneumonia virus called Severe Acute Respiratory Syndrome exacerbated an air travel downturn.
The financial situation for the U.S. airline industry has never been worse, after the Sept. 11, 2001, attacks sparked an unprecedented crisis for overleveraged companies.
But AirTran, like low-fare pioneer Southwest Airlines Inc.<LUV.N> is managing the doldrums better than most. Southwest on Monday also posted a modest profit, $24 million.
"We continue to believe that AirTran is a well managed low-fare airline that is doing the right things," said Gary Chase, analyst at Lehman Brothers. The company, based in Orlando, Florida, is still ordering planes and expanding.
Alaska Air Group Inc. <ALK.N>, based in Seattle, posted results that were slightly below the Street's expectations. The loss was $56 million or $2.12 per share.
"Alaska was a bit disappointing, it looks like they were affected a little more by the war more than we thought up there on the West Coast," Blaylock & Partners airline analyst Ray Neidl. "We were expecting a loss, but this was a little larger than we were expecting."
Shares of most major U.S. airlines were mixed on Tuesday, with the American Stock Exchange's airline <.XAL> down 0.5 percent to 34.94. (Additional reporting by David Bailey and Meredith Grossman Dubner in Chicago)