American Airlines parent AMR Corp. seeks Ch. 11 protection
American Airlines: The nation's third-largest airline also said Tuesday that CEO Gerard Arpey had stepped down and was replaced by company president Thomas W. Horton.
FORT WORTH, Texas
American¬†Airlines¬†and its parent company are filing for bankruptcy protection as they try to cut costs and unload massive debt built up by years of high fuel prices and labor struggles. There will no impact on travelers for now.
The nation's third-largest¬†airline¬†also said Tuesday that CEO Gerard Arpey had stepped down and was replaced by company president Thomas W. Horton.
AMR Corp. has continued to lose money while other U.S.¬†airlines¬†returned to profitability in the last two years.
Horton said the board of directors unanimously decided to file for bankruptcy after meeting Monday in New York and again by conference call on Monday night.
American¬†said it would operate normally while it reorganizes in bankruptcy. The¬†airline¬†said it would continue to operate flights, honor tickets and take reservations. It said the AAdvantage frequent-flier program would not be affected.
Horton said, however, that as the company goes through a restructuring it will probably reduce the flight schedule "modestly," with corresponding cuts in jobs.
The company will delay the spin-off of its regional¬†airline¬†operation,¬†American¬†Eagle, which was expected in early 2012. AMR Eagle Holding Corp. also filed for bankruptcy.
American¬†was the only major U.S.¬†airline¬†that didn't file for bankruptcy protection in the aftermath of the 2001 terrorist attacks that triggered a deep slump in the¬†airline¬†industry. The last major¬†airline¬†to file for bankruptcy protection was Delta in 2005.
Speculation about an AMR bankruptcy grew in recent weeks, however, as negotiations with pilots and other workers over cost-saving labor contracts seemed to stall. The company said that labor-contract rules forced it to spend at least $600 million more per year than other¬†airlines.
Horton said, however, that there was no single factor that led to the bankruptcy filing. He said the company needed to cut costs in view of the weak global economy and high, volatile fuel prices. The average price of jet fuel has risen more than 50 percent in the past five years.
American¬†was the world's biggest¬†airline¬†as recently as 2008, but has fallen behind United and Delta after those two companies bought other¬†airlines.
Fort Worth-based AMR lost $162 million in the third quarter and has posted losses in 14 of the last 16 quarters.
AMR has about $4 billion in cash and has announced plans to order 460 new narrow-body planes used primarily in the U.S., plus other jets for longer flights.
American¬†was founded in 1930 from the combination of more than 80 smaller carriers. It now flies about 240,000 passengers per day and has about 78,000 employees.