Parent of American Airlines files for bankruptcy
The parent company of American Airlines, facing its fourth straight year of operating at a loss, filed for Chapter 11 bankruptcy protection on Tuesday, a move designed to reduce debts and cut labor and other costs.
AMR Corp., which also announced a new chief executive, said it was running normal flight schedules and that reservations, frequent-flier programs and all other operations were conducting business as usual.
AMR said in a release that all of its major rival airlines had restructured their costs and debts through bankruptcy reorganization, giving the company a "very substantial cost disadvantage compared to our larger competitors."
AMR also cited global economic uncertainty, rising fuel costs and increasing competition as factors compounding its troubles. “Our board decided that it was necessary to take this step now to restore the company's profitability, operating flexibility and financial strength," said Thomas W. Horton, AMR's newly appointed chairman and chief executive.
The company said Tuesday that Horton was named chairman and chief executive of both AMR and American Airlines. He replaces AMR Chief Executive Gerard Arpey, who has decided to retire.
In its filing with the U.S. Bankruptcy Court in New York, AMR said it had $24.7 billion in assets and $29.6 billion in debt as of Sept. 30. The company said it has about $4.1 billion in cash and short-term investments to pay its vendors and suppliers.
For the nine months ended Sept. 30, AMR posted a net loss of $884 million, more than double the loss of the prior year's nine-month period.
-- Don Lee