American Airlines Files Chapter 11 Bankruptcy
Tap to Call - (877) 250-8242

American Airlines Files Chapter 11 Bankruptcy

November 29, 2011

By

Share this article

SHARE

 

The nation's third-largest airline announced today that it has filed Chapter 11 bankruptcy in the Southern District of New York.

Dallas-based AMR Corporation, the parent company of both American Airlines and American Eagle, filed the Chapter 11 reorganization after losing approximately $868 million during the first nine months of the year. The bankruptcy will affect both American Airlines and American Eagle as well as other U.S. based subsidiaries.

American Airlines was the only major U.S. airline to not turn a profit in 2010, adding to the company's financial woes.

In a statement released Tuesday morning, Thomas Horton, the current president of the company, explained the decision to seek bankruptcy protection.

"Our board decided that it was necessary to take this step now to restore the Company's profitability, operating flexibility, and financial strength," said Horton. "We are committed to working as quickly and efficiently as possible to appropriately restructure American so that it can emerge from Chapter 11 well-positioned to assure the Company's long term viability and its ability to compete effectively in the marketplace."

The bankruptcy filing will allow the airline the unique chance to renegotiate contracts with its pilots, other employees, and vendors.

Rumors of AMR Corporation considering bankruptcy have been circulating since last week, following the company's final 2011 board meeting. At the time, a spokesman said that bankruptcy was not the company's first nor preferred choice, but would not deny that filing bankruptcy was under consideration.

American Airlines was the only major U.S. air carrier not to file bankruptcy or merge in the wake of the 2001 terrorist attacks that saw commercial travel take a slump. Since then, rising fuel costs and an aging air fleet have added costs to the company's operation. American failed to be profitable in 14 of the last 16 quarters.

The company has unrestricted access to approximately $4.1 in cash, which should be ample to get it through the Chapter 11 bankruptcy process, Horton said. The company hopes to emerge from bankruptcy within 18 months without having any impact on fliers.

American Airlines also announced that its CEO Gerard Arpey will step down.


Back to Newspaper Home


Tap to Call - (877) 250-8242

Copyright © 2018 MH Sub I, LLC. All rights reserved. ® Self-help services may not be permitted in all states. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state.Your use of this website constitutes acceptance of the "Terms & Conditions", "Supplemental Terms", "Privacy Policy" and "Cookie Policy."