American Airlines Boeing 767-323 N395AN (msn 29432) (Oneworld) MIA (Brian McDonough), originally uploaded by Airliners Gallery.

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?

American Slide Show: CLICK HERE

American Airlines Boeing 777-223 ER N783AN (msn 30004) MIA (Bruce Drum) (orders 2 777-323 ERs), originally uploaded by Airliners Gallery.

AMR Corporation (American Airlines and American Eagle Airlines) (Dallas/Fort Worth) continues to bleed money. AMR Corporation today reported a net loss of $162 million, or $0.48 per diluted share, for the third quarter of 2011, compared to a net profit of $143 million, or $0.39 per diluted share, for the same period of 2010.

According to the airline, “these results reflect the adverse impact of quarter-end volatility in WTI crude oil prices and foreign exchange rates. WTI prices decreased, while jet fuel prices remained high, which resulted in a non-cash item relating to fuel hedging ineffectiveness being recorded in fuel expense. In addition, foreign exchange rates were volatile and the U.S. dollar strengthened during the period, and as a result of revaluing foreign assets, the Company incurred a foreign exchange loss. Altogether, these items, which the Company described on October 10, increased AMR’s net loss by approximately $50 million or 15 cents per share.

In the third quarter, the Company’s overall performance was negatively impacted by fuel prices, which increased 41 percent compared to the prior year period. Taking into account the impact of fuel hedging, AMR paid on average $3.15 per gallon for jet fuel in the quarter versus $2.24 per gallon in the third quarter of 2010. As a result, the Company paid $653 million more for fuel in the third quarter of 2011 than it would have paid at prevailing prices from the corresponding prior-year period.”

In October, American Airlines announced it will adjust its late fall and winter schedule, which is expected to result in fourth quarter mainline capacity that is approximately 3 percent lower on a year-over-year basis.

While advance bookings are generally in line with last year, the Company is taking these additional steps in light of the uncertain economic environment, ongoing high fuel costs and to ensure it runs a reliable schedule for its customers given additional pilot retirements it anticipates throughout the fourth quarter.

With these latest moves, American expects full year 2011 capacity to be up about 0.4 percent year-over-year for mainline and consolidated capacity will be up approximately 1.2 percent. The Company’s initial plan, announced in January, called for full year mainline capacity to increase and consolidated capacity to increase by more than 3 and 4 percent respectively.

In October, American also announced plans to retire up to 11 Boeing 757s in 2012. The retirements will result in maintenance and fuel cost savings.

According to the airline, “while the cost of jet fuel has been increasing recently and remains very volatile, based on the October 7 forward curve, AMR is planning for an average system price of $3.02 per gallon in the fourth quarter 2011 and $3.01 per gallon for all of 2011. Consolidated consumption for the fourth quarter is expected to be 667 million gallons of jet fuel.

AMR has 52 percent of its anticipated fourth quarter 2011 fuel consumption hedged at an average cap of $3.01 per gallon of jet fuel equivalent ($88 per barrel crude equivalent), with 41 percent subject to an average floor of $2.23 per gallon of jet fuel equivalent ($55 per barrel crude equivalent). AMR has 51 percent of its anticipated full-year consumption hedged at an average cap of $2.77 per gallon of jet fuel equivalent ($83 per barrel crude equivalent), with 39 percent subject to an average floor of $2.08 per gallon of jet fuel equivalent ($55 per barrel crude equivalent).”

Copyright Photo: Bruce Drum.

American Slide Show: CLICK HERE