American Airlines parent company AMR Corp. (NYSE:AMR) has filed for bankruptcy, becoming the final large U.S. full-share airline to seek court protection from creditors.
After failing to secure cost-cutting labor agreements and sitting out a round of mergers, American went from being the world’s largest airline to number 3 in the U.S. In filing for Chapter 11 in U.S. Bankruptcy Court in Manhattan today, American listed $24.7 billion in assets and $29.7 billion in debt.
Normal flight schedules will continue for both American Airlines and its American Eagle region unit, said AMR. With the exception of Chairman Gerard Arpey’s retirement — he will be replaced by Thomas Horton — it will be business as usual.
Many of American’s peers have used bankruptcy to shed costly pensions and retiree benefits and to restructure debt. American watched as rival carriers merged, giving them larger route networks that appealed to lucrative corporate travel customers, but had been too embroiled in negotiations with unions for all of its major work groups to do the same.
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As far back as 2006, American has been in negotiations with unions, seeking to boost employee productivity and ease what it said was an $800 million labor-cost disadvantage to other carriers. However, the airline’s pilots, flight attendants, mechanics, and baggage handlers wanted to use contract talks to regain some of the $1.6 billion in annual concessions they made in 2003 to help the company avoid bankruptcy.