American Airlines and Parent Company AMR File for Bankruptcy
The company said that, in order to achieve a cost and debt structure that is “industry competitive” and thereby assures its long-term viability and ability to continue a “world-class travel experience” for its customers, AMR and its U.S.-based subsidiaries, including American Airlines and American Eagle, have filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court in New York.
AMR’s Board of Directors said in a statement that it had determined that a Chapter 11 reorganization is in the best interest of the company and its stakeholders. The move had long been expected, but most analysts believed it was at least a year or more away.
According to the company, the Chapter 11 process will enable American Airlines and American Eagle to continue conducting normal business operations while they restructure their debt, costs and other obligations. Both airlines are operating normal flight schedules on Tuesday.
In addition, AMR said it has approximately $4.1 billion in unrestricted cash and short-term investments which it will use to pay for its vendors, suppliers and other business partners during the Chapter 11 process. The filings will have no direct legal impact on American’s operations outside the United States.
“This was a difficult decision, but it is the necessary and right path for us to take – and take now – to become a more efficient, financially stronger, and competitive airline,” said Thomas W. Horton, Chairman, Chief Executive Officer and President of AMR and American Airlines.
Meanwhile, the Board of Directors of AMR Corporation appointed Tom Horton as Chairman and Chief Executive Officer of the Company, succeeding Gerard Arpey who informed the Board of his decision to retire. Horton will also succeed Arpey as Chairman and Chief Executive Officer of American Airlines and will retain the title of President.