American is continuing negotiations
American Airlines, the world's largest carrier, has reached a last-minute wage deal with its three major unions, staving off immediate bankruptcy.
American Airlines reached deals with the Transport Workers' Union, the biggest of the airlines' unions and the Association of Professional Flight Attendants (AFPA) on Monday.
Late in the evening, the pilots union, with 13,500 members at American, also agreed wage and benefit concessions worth $660m.
"By taking these decisive actions, the union leadership and our employees have demonstrated an unwavering commitment to the future of the company, and have enabled us to avoid an immediate filing with the bankruptcy court," American chief executive Donald Carty said in a statement.
Shares in American's parent company AMR closed 52 cents, or 33%, higher at $1.58.
American avoided Chapter 11 bankruptcy just as the smaller US Airways emerged from eight months of bankruptcy protection.
The airline industry has reported losses of about $30bn since the attacks on 11 September 2001, which depressed demand for the already struggling airlines.
AMR reported a record industry loss of $3.5bn in 2002 and United Airlines, the world's second-largest carrier, has been in bankruptcy since December.
We are confident that the savings we are offering will enable American Airlines to compete both in the short and long-term
Allied Pilots' Association
About 70% of American's 100,000 workforce will now vote over the next 15 days on the pay cuts of 15% to 20%, which will help the airline save about $1.8bn.
AMR's bankruptcy would be the biggest in global aviation history and could still occur if it does not secure additional finance from institutional lenders.
Analysts said the airline was burning through more than $5m a day because of a fall in bookings following the outbreak of war in Iraq.
The Allied Pilots' Association said that it had analysed a tentative deal reached earlier this week by rival United Airlines with its pilots.
"We are confident that the savings we are offering will enable American Airlines to compete both in the short and long-term with a newly restructured United and US Airways, as well as with low-cost carriers in our industry."
While American Airlines is in trouble, its smaller rival US Airways has managed to pull itself back out of bankruptcy
On Friday the union representing flight attendants said it had presented a proposal to the company that would meet the airline's goal of achieving $340m in cuts from flight attendants.
American had already reached agreement with its fleet service workers.