NEW YORK (CNN/Money) - American Airlines' flight attendants union announced it would hold a new vote on $340 million in annual concessions due to outcry over a compensation plan for the airline's management, a move that could force the world's largest airline into bankruptcy.

The rank-and-file members of the Association of Professional Flight Attendants initially rejected the cost-cutting six-year pact Tuesday by a 51 to 49 percent margin, then the next day approved the pact by a 53-47 percent vote at the strong urging of union leadership. But both votes took place before the compensation packages for management were widely known. The union leadership said compensation plans for American's best paid executives were "morally bankrupt" and demanded another vote of members.

American Airlines, the world's largest airline, faces a new bankruptcy threat due to union outcry over its executive compensation plans.

"This taints the agreement that was ratified just two days ago in a wrenching process for our members," said a letter from APFA President John Ward late Friday night. "Every APFA member - those who voted for the agreement and those who voted against it - are outraged by this action, as am I."

American Airlines had said that it needed the concession contracts with the flight attendants and the other two unions approved by this past Wednesday at the latest or it would be forced to immediately file for bankruptcy court protections. Its spokesmen would not take questions on the APFA threat of holding a new vote.

"American has a valid ratified agreement with the APFA," was the only statement from American spokesman Gus Whitcomb.

There was no immediate word from two other unions - the Allied Pilots Association and the Transport Workers Union, which represents most American ground workers - on their plans to go forward with more than $600 million each in annual wage concessions approved this past Tuesday. The head of the TWU at American had threatened Thursday evening not to sign the agreement due to the executive compensation controversy, although he did not include that threat in a letter he sent to the CEO of American parent AMR Corp. (AMR: Research, Estimates)

If there is a bankruptcy filing, it will not have significant immediate effect on American Airlines customers. The carrier plans to file under Chapter 11 of the bankruptcy code, which allows for continued operations. But Fort Worth, Texas-based American could eventually make deeper cuts in its schedule of flights and route network to cut costs and satisfy creditors.

The employees will also likely feel deeper cuts due to the bankruptcy filing. American has said that in order to win approval from lenders for $1.5 billion in loans needed to operate during bankruptcy, so-called debtor-in-possession financing, that it will need an additional $500 million in annual labor cost savings on top of $1.8 billion in annual cost cuts approved by the unions this week or imposed on the nonunion employees.

Even if the unions or their memberships reject the call for deeper cuts, the airline has the ability to ask the bankruptcy judge to impose the deeper cuts.

A filing, if it occurs, would likely wipe out American's investors. Most bankruptcy filings leave little for holders of the company's equity, although some companies in Chapter 11 bankruptcy are able to have their shares continue trading for weeks or even months after filing.

The airline revealed in a Securities and Exchange Commission filing Tuesday that was reported in the Wall Street Journal Thursday that its top six executives were in line for retention bonuses equal to two times their base salary if they stayed with American through January 2005. A seventh officer of the company was due 1.5 times his base pay.

It also revealed that a supplemental pension program for its top paid executives had been funded for the first time in order to protect those benefits in case of a bankruptcy filing. The plan, in place for 17 years, made pension payments above the level allowed the best tax treatment by the Internal Revenue Service rules. But previously pension payments made under the plan were made from operating funds, which put the plan payments at risk in case of a bankruptcy. The partial funding of the plan, done last October, gave some protection to those supplemental pension payments due to top paid executives.

AMR Corp. CEO Don Carty

After initially defending both plans, late Friday afternoon AMR Corp. CEO Donald Carty announced that he and the other top officers had given up their retention bonuses.

"I have apologized to our union leaders for this and for the concern it has caused our employees," Carty said. "Those executives who have made the personal commitment to remain with American during this financial crisis, myself included, are not here solely for monetary reasons and we have all agreed to give up these retention payments in order to give our employees confidence in management's on-going commitment to shared sacrifice."

Carty's pay for 2003 is $543,453, after he took a 33 percent pay cut, so the bonus was worth about $1.1 million if he does not take any additional pay cuts. The 2003 base pay of other officers has not yet been revealed by the company.

The company said the funding of the supplemental pension plan for these officers and other top paid executives would remain in place despite the union objections.

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But APFA and other union officials said Friday that the American had done damage to the trust of employees with its attempt to set up the compensation plans.

"No doubt, this cancellation is only a result of the fact that they were caught with their hands in the cookie jar," said a statement from APFA President Ward to his members late Friday.

If it does file for bankruptcy protection, American will be the third major U.S. air carrier to seek bankruptcy protection in the last year, following No. 2 United Airlines, a unit of UAL Corp., which filed in December, and No. 7 US Airways Group, which filed for protection in August but emerged from bankruptcy court protections last month. Air Canada filed for protection from creditors earlier this month as well.

Even if the concession labor agreements stay in place, American admitted it faces a difficult financial road ahead, and that it might still be forced to seek bankruptcy court protections if it can't negotiate new agreements with lenders and suppliers.

Tuesday, in the same SEC filing that revealed the executive compensation plan, the company's outside auditor, Ernst & Young, said in a Securities and Exchange Commission filing that the company's current financial condition is tenuous enough to, "raise substantial doubt about the company's ability to continue as a going concern."

The major airlines, such as American, which operate a large network of hubs serving extensive locations to accommodate business travelers, have been having trouble supporting the costs of those systems for more than two years as demand for business travel -- and the fares business travelers were willing to pay -- fell.

Increased competition from lower-cost, low-fare carriers, such as Southwest Airlines and JetBlue Airways, is causing significant problem for the so-called "network" carriers such as American.

Neither AMR nor most of the other major network carriers have reported a profitable quarter since 2000, nine months before the Sept. 11 terrorist attacks caused a sharp drop in demand for travel and further financial problems. Last month's U.S. attack on Iraq also caused further erosion in demand for air travel, particularly on international routes.

AMR is set to report first quarter financial results on Wednesday. Analysts surveyed by earnings tracker First Call expect the company to post a loss of $950.7 million, or $6.08 a share, excluding special items in the first quarter, up from a loss $3.53 a share on that basis a year earlier.

Shares of AMR rose 77 cents or 18 percent, to $5.00 in trading Thursday, following news late Wednesday that the APFA had approved the concession deal. Shares were not traded Friday due to the Good Friday holiday in the United States.