American Airlines files for Chapter 11 in order to shed a heavy debt burden. // © 2011 American Airlines
Last week, AMR Corporation, parent company of American Airlines and American Eagle, filed for Chapter 11 of the U.S. Bankruptcy Code in an effort to reduce labor costs and shed a heavy debt burden. AMR’s board of directors determined that a Chapter 11 reorganization would be in the best interest of the company and its stakeholders.
AMR is the last of the major legacy airline companies in the country to file for bankruptcy. Much like the bankruptcy process was for other U.S. carriers, American Airlines and American Eagle will be able to continue conducting normal business operations while they restructure their debt, costs and other obligations.
“The people of American have worked tirelessly and honorably to overcome the challenges that we’ve confronted over the past decade, and we made incredible progress against all the odds,” wrote Tom Horton, the newly appointed chairman, CEO and president of AMR Corp. and American Airlines, in a letter to employees. “Yet, in spite of all our progress, other factors evolved around us to make our road ahead that much tougher. The impact of our significant cost disadvantage compared to our now-larger competitors, all of which restructured their costs and debt through Chapter 11, has intensified in recent weeks due to global economic uncertainty, volatile and rising fuel prices and ever greater competitive challenges.”
AMR will be filing monthly operating reports with the bankruptcy court and also plans to post these monthly operating reports on the investor relations section of AA.com. The company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the investor relations section of AA.com. www.aa.com/restructuring