If you want to know how a business is really doing, ask the employees on the front line. Their intuition is usually better than most, and their collective information (by the time they share what they know with each other) is often comprehensive.

Flight attendants at American Airlines, run by parent company AMR Corporation(NYSE: AMR), were among the first to publicly suggest the company would seek bankruptcy protection. Today, the airline's flight attendants' union said bankruptcy could come in the near future, even as American's management refused specific comment.

The numbers aren't encouraging. CEO Donald J. Carty has said for a long time that American must cut $4 billion in operating costs annually in order to avoid financial meltdown. Management suggests $2 billion could be saved by changing routes and flight schedules, cutting salaries, and through additional streamlining (redistributing half-eaten snack bags, perhaps?), but the other $2 billion must come from unions.

The stock is tumbling because the writing is almost on the wall: Either the unions concede to nearly $2 billion in wage and benefit concessions (which they have been reluctant to do), or AMR has little recourse but to seek bankruptcy protection. The company lost $3.5 billion in 2002, and is burning about $140 million a month, giving its available cash balance about 12 months to last.

Management remains hopeful it can avoid bankruptcy through union negotiation, but if AMR does file, it will join major carriers United Airlines(NYSE: UAL) and U.S. Airways, both of which filed last year. U.S. Airways hopes to emerge from bankruptcy by March 31, and United is still struggling with restructuring and planning, for one thing, a discount air carrier.

Everything might get even more difficult. Today, the Air Transport Association warned that U.S. airliners could cut 70,000 jobs and lose up to $4 billion quarterly if war starts with Iraq and the government doesn't offer more industry aid. Airlines are already struggling with higher fuel prices, new taxes, and lower traffic loads.

To end on a positive note, some profitable airlines remain, including Southwest(NYSE: LUV), and where one company fails, there's hope another will step in and do a better job.