American Airlines has escaped bankruptcy by the skin of its teeth after persuading its major union groups to accept new contracts that will save the airline $1.8 billion annually.

The white-knuckle ride to stay out of Chapter 11 came to an end last week when American's flight attendants, represented by the APFA union, acquiesced in a second vote that was nervously permitted when the first vote rejected a concessions deal by just 533 votes.

In securing cheaper labour agreements, American succeeded where US Airways and United Airlines failed. Chief executive Don Carty convinced employees that the deals on offer were better than those that would be offered from Chapter 11 bankruptcy protection. He made clear he would not play a waiting game, issuing an ultimatum that all three major unions - APA, TWU and APFA - had to ratify the new contracts or he would file for Chapter 11.

Source: Flight International