American's attempts to avoid bankruptcy look in vain

Standard & Poor's, which runs the S&P 500 index of 500 leading US firms, said it will drop AMR on Thursday after the stock's 90% plunge in the past year.

Like its peers, the airline is being hit hard by a combination of the world economic slowdown and fears about impending war in Iraq - which are not only driving away passengers, but pushing the cost of fuel sky-high.

The airlines' trade body, the Air Transport Association (ATA), underscored the problems with a sobering assessment released on Tuesday,

War, it warned, could finish off many airlines if - as it predicts - overall air travel slides 8%, 70,000 more jobs go and 2,200 flights are eliminated.

The ATA estimates 2003 will produce $11bn (�6.9bn) in losses for the industry.

Elsewhere in the industry, United Airlines - one of those carriers already in bankruptcy proceedings - requested more time to file its reorganisation plans.

And Delta shares slumped almost a quarter after it warned that bookings were well down with no sign of recovery, meaning negative cash flow for the first three months of 2003.

Bad to worse

The rush of bad news follows 18 months of misery for US carriers.

Already in trouble thanks to oversupply, poor management and expensive staff, the industry was hammered by the slowdown following the 11 September attacks, and - despite $15bn in government help for a number of carriers - has never quite recovered.

American had thus far believed it could avoid seeking protection from its creditors, unlike US Airways and UAL's United - although its chief executive admitted in January that current conditions were "treacherous" and probably "unsustainable".

But its flight attendants' union warned on Monday that bankruptcy could come "sooner rather than later".