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American Airlines Bankruptcy Rumors Spread As Pilots Head For The Exits

Ryan Faughnder |
October 3, 2011 | 11:26 a.m. PDT

Senior News Editor

American Airlines' stock price fell to its lowest levels since 2003 Monday amid bankruptcy rumors and worries over another recession for the U.S. economy. At one point, stocks were down by as much as 40 percent

American Airlines plane (via Creative Commons)
American Airlines plane (via Creative Commons)

This comes after reports that 200 pilots have retired in the last two months, fueling speculation that the company is again on the edge of filing for Chapter 11 bankruptcy protection. Pilots may have been retiring earlier than usual to cash out stock and protect pensions, according to Wall Street Journal reports.

The company's statements seem to have done little to calm investor fears. A spokesperson told Bloomberg that bankruptcy is "certainly not our goal or our preference."

The state of the airline industry is closely watched when there are fears of economic turmoil, given that traveler demand is an indicator of people's faith in the economy. 

A report by the International Air Transport Association (via Forbes) shows that, while traveler demand has improved year over year, it has fallen since July.

As the Wall Street Journal points out in its Hear on the Street column, concerns over American Airlines center on it net debt of $12 billion, compared to its $1.1 billion market cap.

Meanwhile, the S&P 500 Monday reached a new low for the year, amid worries about Europe's markets and the slowing U.S. economy.

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