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AMR's auditor issues going concern warning

AMR Corp.'s independent auditor raised doubt about the company's ability to continue as a going concern, according to a U.S. regulator filing on Tuesday by the parent company of American Airlines.

The concern was raised in a letter dated March 31 by Ernst & Young LLP and disclosed in AMR's annual financial statement filed with the Securities and Exchange Commission. The statement was filed late under a 15-day extension.

The auditor cited the recent history of significant losses, negative cash flows from operations, uncertainty about its operating costs, liquidity requirements in credit agreements, and diminishing financial resources.

These issues “raise substantial doubt about the company's ability to continue as a going concern,” Ernst & Young said in the letter.

A vote on concession deals by labor unions could determine the future of American Airlines, which said it would file for bankruptcy if any of its three main unions did not ratify the concessions aimed at saving the world's largest air carrier $1.8 billion a year in labor costs.

Voting results were due by 11 a.m (1600 GMT) on Tuesday.

The Forth Worth, Texas-based company was close to wrapping up $1.5 billion in debtor-in-possession financing, in the event the company files for bankruptcy.

AMR lost an airline industry-record $3.5 billion in 2002 and has said for months that its losses were unsustainable.

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