By Angela K. Brown, Associated Press Writer

FORT WORTH, Texas (AP) -- Over the next two weeks, American Airlines pilots must decide whether 2,500 layoffs and other concessions are too high a price to stave off a bankruptcy filing.

As part of the agreement to save the company $660 million annually, pilots would take a one-year pay cut of 23 percent and a 17 percent pay cut for the remainder of the six-year agreement, union leaders say.

But the agreement also includes 1.5 percent annual pay raises beginning in May 2004, profit sharing of up to 15 percent annually and stock options. Pilots will retain medical disability but will see some health-care benefit changes.

"I don't think anybody's thrilled with the significant pay cuts and furloughs ... but the alternative clearly would be even worse," Gregg Overman, a spokesman for the Allied Pilots Association, said Tuesday, a day after the pilots and company reached the tentative agreement.

Pilots have 14 days to ratify the new contract and will vote electronically in a speedier method recently approved by the union board.

The cuts would reduce the pilot workforce by 20 percent, beginning at the bottom of the seniority ladder. It's unclear how many pilots will retire.

"As a stand-alone, it is apparent that we gave a tremendous amount of concessions," union President John E. Darrah told pilots in a statement Monday night.

American also said it still needs "meaningful concessions" from vendors, aircraft lease holders and suppliers. The company said it would use grace periods in some of its debt and lease obligations.

American's parent, Fort Worth-based AMR Corp., asked the Securities and Exchange Commission on Tuesday for more time to file its 2002 annual report. The company said it was busy with cost-cutting steps and would file soon after completing negotiations with employees, aircraft creditors and vendors.

AMR has lost nearly $5.3 billion in the past two years and has faced increasing competition from low-fare carriers.

But American took a huge step toward preventing bankruptcy Monday by reaching agreements with the three most important labor groups in its work force of 99,000.

The company secured $1.8 billion in concessions -- including $350 million from the Association of Professional Flight Attendants and $620 million from the Transport Workers Union.

George Price, spokesman for the flight attendants, declined to disclose layoff numbers, salary cuts or other details of the agreement.

The news lifted shares of American sharply for the second time in two days. AMR shares rose 43 percent, or 90 cents, and closed at $3 Tuesday afternoon on the New York Stock Exchange as investors considered a bankruptcy filing much less likely.

Over the weekend, the company reached tentative agreements with six groups of ground workers, totaling 2,500 employees. The company had previously reached a tentative deal with 16,300 baggage handlers.

American chairman Donald J. Carty praised union leaders, saying the "ground-breaking" agreements show "the spirit and the determination and commitment that helped make American the number-one airline in the world and serve notice that we intend to keep that distinction."

Carty said he would cut his $585,813 base salary by a third, decline a bonus for the third straight year and ask the AMR Corp. board to reduce the compensation of other senior officers. He took a pay freeze late in 2001 and in 2002.