AMERICAN BUDGETS $3 BILLION TO WEATHER ANY PILOT STRIKE.

Byline: Katie Fairbank Associated Press 

Hunkering down in case its pilots strike, American Airlines is building up a war chest and preparing layoff notices for flight attendants and other employees.

American stepped up preparations for a walkout in advance of negotiations scheduled for Monday with its pilots union in Washington, D.C., under the auspices of the National Mediation Board.

If the bargaining is not successful, American's pilots can legally go on strike at 9:01 p.m. PST on Feb. 14, the end of a 30-day cooling off period and the start of the busy Presidents Day holiday weekend.

If the pilots walk off the job, the airline plans to ground its planes.

On Friday, the company began notifying about 70 percent of its 90,000 employees, including flight attendants and ground workers, of possible layoffs.

``We have to tell our employees - that's a courtesy,'' company spokesman John Hotard said, although such notification is not required by federal labor laws.

American's flight attendants union has filed a grievance, saying they must be paid during any work stoppage because of a pilots' strike. American disagrees and will probably arbitrate the matter, said company spokesman Al Comeaux.

The Allied Pilots Association said the layoff letters are divisive and unnecessary.

``In our judgment, it's an effort to pit employee against employee, which is not a healthy thing,'' said pilots union spokesman Gregg Overman.

Seeking to bolster its finances, American's parent company, AMR Corp., has borrowed $1 billion and pledged its fleet of planes as collateral for another $1 billion in credit. The war chest is in addition to more than $1 billion the airline had on hand.

The money would be used to pay bills if the airline stopped flying and lost passenger fares from a strike.