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The company that owns American Airlines has filed for Chapter 11 bankruptcy, it announced Tuesday.
In a statement Tuesday morning, AMR said its board had decided that a voluntary Chapter 11 reorganization was in the best interest of the company and its shareholders:
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.
AMR said the airline would continue to operate as usual. Existing reservations will not be affected and normal flight schedules will be maintained.
The company has sufficient cash reserves to continue to pay employees and suppliers, the statement said.
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As of September 30, AMR had $24.7 billion in assets and $29.6 billion in debt, according to a filing with the federal bankruptcy court in Manhattan cited by the New York Times.
Chairman and chief executive Thomas Horton—who has newly replaced Gerard Arpey, who is retiring—said bankruptcy was a difficult decision, but a necessary one. He referred to other airlines that have restructured debt and shed costly employee benefits through Chapter 11.
Horton was confident the company would emerge "a more efficient, financially stronger, and competitive airline," he said.
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American was the only major US airline that didn't file for bankruptcy protection after the 2001 terrorist attacks, said the Associated Press.
Court-supervised restructuring was "not our goal or our preference," the company said earlier this year after its stock fell to its lowest price since 2003.
AMR lost $162 million in the third quarter as it again suffered under rising fuel expenses, reported Dow Jones.
American's labor costs are also disproportionately high—some $600 million more than those of its competitors, said Bloomberg. These costs represent around 28% of American's total revenue, CNN Money calculated, which is the highest percentage of any major airline currently operating in the US.
The airline was the only major carrier not to turn a profit last year and looks set for another full-year loss in 2011, Dow Jones said.
AMR shares have fallen 79% this year. They fell 60% to 64 cents premarket Tuesday.
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