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American Airlines Files For Bankruptcy Protection

by Mike Godfrey, Tax-News.com, Washington

02 December 2011


AMR Corporation, the parent company of American Airlines, has filed a voluntary petition for bankruptcy protection with the Southern District of New York's Bankruptcy Court.

The company said that the move will enable it to restructure and find immediate operational cost reductions, thus making its operations financially viable.

In a statement, AMR Corporation said that the Chapter 11 reorganization filing would not impact the general running of the airline and reassured passengers that all bookings would be honored. The restructure will enable American Airlines “to achieve a cost and debt structure that is industry competitive and thereby assure its long-term viability and ability to continue delivering a world-class travel experience for its customers,” the company said.

The company underscored that it would continue to provide a safe and reliable service to passengers, and operate normal flight schedules. Existing loyalty point balances will be retained, the company has said, and employee wages, and benefits will be maintained without interruption.

The company has yet to say whether it will retain newly-brokered orders with Airbus and Boeing under the filing, which would update the airline's fleet for more environmentally-efficient aircraft models.

In a record-breaking deal, American Airlines has agreed to the purchase of 260 single-aisle Airbus aircraft and 200 Boeing 737s, with options to purchase 465, in a deal that could cost the firm USD38.5bn. Analysts say that the replacement of the airline's existing fleet is crucial for the company to maintain competitiveness as fuel prices rise.

TAGS: aviation

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