American Airlines parent files for bankruptcy protection
AMR Corporation, the parent company of American Airlines, announced Tuesday morning that the company had filed bankruptcy in New York. American is the last major legacy U.S. carrier to seek the help of the courts to reduce costs. The airline said operations will continue normally through the process.
The parent company of American Airlines, AMR Corporation, the last traditional American air carrier to avoid turning to the courts for protection, announced Tuesday morning that it had filed for bankruptcy.
In a statement on its website, American and its regional affiliate, American Eagle, pledged to continue normal operations while the bankruptcy process plays out.
"We took this action in order to achieve a cost and debt structure that is industry competitive and thereby assure our long-term viability and ability to continue delivering a world-class travel experience for customers," the airline said.
American says it will maintain all its reservations, frequent flyer mile accounts and elite status and all existing relationships with other carriers. According to the BBC, American Airlines' chairman Thomas Horton said the company was confident it would emerge from bankruptct a healthier company.
"We are committed to maintaining a strong presence in worldwide markets," he said. "I am confident American will emerge even stronger as a global leader known for excellence and innovation."
According to the New York Times, reducing labor costs will be a major goal of Americans while in bankruptcy. All of its major legacy competitors, like Delta and United, have greatly recuced labor costs through bankruptcy.
"As of Sept. 30, AMR had $24.7 billion in assets and $29.6 billion in debt, according to a filing with the federal bankruptcy court in Manhattan. The company added that it has about $4.1 billion in cash and short-term investments that it can use to pay off vendors and suppliers," the Times reported.
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