AMR Corporation (Dallas/Fort Worth), the parent company of American Airlines, Inc. (Dallas/Fort Worth) and AMR Eagle Holding Corporation (American Eagle Airlines) (Dallas/Fort Worth) today filed for Chapter 11 bankruptcy protection and reorganization.
The corporation issued the following statement:
“In order 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 and certain of its U.S.-based subsidiaries (including American and American Eagle), today filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York.
AMR’s Board of Directors determined that a Chapter 11 reorganization is in the best interest of the Company and its stakeholders. Just as with the Company’s major airline competitors in recent years, the Chapter 11 process enables American Airlines and American Eagle to continue conducting normal business operations while they restructure their debt, costs and other obligations.
American Airlines and American Eagle are operating normal flight schedules today, and their reservations, customer service, AAdvantage® program, Admirals Clubs and all other operations are conducting business as usual. Likewise, throughout the Chapter 11 process, American and American Eagle expect to continue to:
1. Provide safe and reliable service;
2. Fly normal schedules;
3. Honor tickets and reservations, and make exchanges and refunds as usual;
4. Fully maintain AAdvantage frequent flyer and other customer service programs, and ensure all AAdvantage miles and elites status earned by members remain secure and intact;
5. Provide Admirals Club access and similar amenities to members and eligible customers;
6. Remain an integral member of the oneworld® alliance, of which American is a founding member, and continue its codeshare partnerships;
7. Provide employee wages, healthcare coverage, vacation, and other benefits, without interruption; and
8. Pay suppliers for goods and services received during the reorganization process.
The Company has approximately $4.1 billion in unrestricted cash and short-term investments. This cash, as well as cash generated from operations, is anticipated to be more than sufficient to assure that its vendors, suppliers and other business partners will be paid timely and in full for goods and services provided during the Chapter 11 process in accordance with customary terms. Because of the Company’s current cash position, the need for debtor-in-possession financing is neither considered necessary nor anticipated.”
In addition, the Board of Directors of AMR Corporation, the parent of American Airlines, Inc., has named Thomas W. Horton chairman and chief executive officer (CEO) of the Company, succeeding Gerard Arpey , who yesterday informed the Board of his decision to retire. Horton will also succeed Arpey as chairman and chief executive officer of American. Horton will continue to serve as President of AMR and American.
The filing is not a surprise to many given the corporation’s continued losses. Most of AA’s competitors domestically have already gone through a Chapter 11 reorganization process and many will see this as a mechanism to lower AA’s high costs including its labor agreements.
Copyright Photo: Brian McDonough. Will the Oneworld Alliance be weakened with this filing?
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