American Airlines parent AMR Corporation has filed for Chapter 11 bankruptcy protection.
The British Airways transatlantic partner listed $24.7 billion in assets and $29.6 billion in debt in Chapter 11 papers filed today in U.S. Bankruptcy Court in New York.
The company said it had $4.1 billion in cash.
Chairman Gerard Arpey will retire and be replaced by Thomas Horton, AMR said.
The filing has no direct legal impact on American's operations outside the US, the airline said.
Horton, former president of American who takes the role of chairman and CEO, said: “This was a difficult decision, but it is the necessary and right path for us to take - and take now - to become a more efficient, financially stronger, and competitive airline.
“We have met our challenges head on, taking all possible action to secure our long-term position.”
“In recent years, even as the airline industry faced unprecedented challenges, American strengthened our domestic and global network; fortified our alliances with the best partners around the world; launched a transformational fleet deal that will give American the youngest and most efficient fleet in the industry; and invested in our product, service and technology to build a world class customer experience.
“But as we have made clear with increasing urgency in recent weeks, we must address our cost structure, including labour costs, to enable us to capitalise on these foundational strengths and secure our future.”
He added: “Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges.”
Horton said the board decided that it was necessary to take this step now to restore the company's profitability, operating flexibility, and financial strength.
“We are committed to working as quickly and efficiently as possible to appropriately restructure American so that it can emerge from Chapter 11 well-positioned to assure the company's long term viability and its ability to compete effectively in the marketplace," he added.
“We intend to maintain a strong presence in domestic and international markets, including our cornerstones in Dallas/Fort Worth, Chicago, New York, Miami and Los Angeles."
“As we and all airlines routinely do, we will continue to evaluate our operations and service, assuring that our network is as efficient and productive as possible. Achieving the competitive cost structure we need remains a key imperative in this process and, as one part of that, we plan to initiate further negotiations with all of our unions to reduce our labour costs to competitive levels.”
Click here to see the original article
