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American and Fleming struggle to stay afloat

By Maxine Shapiro, KERA 90.1 business commentator

Dallas, TX – American to furlough more employees hoping to stay out of bankruptcy protection, and Fleming and Kmart part ways because of bankruptcy protection. I'm Maxine Shapiro with KERA Marketplace Midday.

So what would you do if you were burning through $5 million a day with no relief in sight? According to the Associated Press, that's exactly what American Airlines in doing - spending a lot more than it's making. Revenues from passengers are down, dramatically and yet the company still can't figure out any other way to cut expenses except through its employees. Sure, some flights were cut, but CEO Don Carty has got to figure out a way to avoid what some analysts feel is inevitable - Chapter 11 bankruptcy protection. Falling short of getting on his hands and knees and begging the unions for help, he has asked the flight attendants to forego a 3% raise that went into effect on January 1st. He has also suggested that employees consider early retirement or a voluntary leave of absence otherwise, more furloughs can be expected. Since September 11th, 24-hundred flight attendants have been furloughed. I wonder if he really expects to bring any of them back? Carty and other American executives are to speaking to shareholders as well as the employee unions today.

Finally, Lewisville-based Fleming Companies and Kmart no longer see a future together. Fleming supplies Kmart with its groceries. There was a 2001 pre-bankruptcy contract that was going to last through Kmart's reorganization. It was full of high hopes and growth. Instead, Kmart filed Chapter 11 and closed almost 300 stores last year, and announced another 300 plus stores would close shortly. Fleming has made inroads with other retailers, in hopes to make up the anticipated losses with Kmart. Kmart accounted for 20% of Fleming's 2002 revenues. And even though Fleming is in debt to the tune of $2.2 billion, it feels terminating the contract is in its best interest. For KERA Marketplace Midday, I'm Maxine Shapiro.

Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to