(PHOTO: REUTERS/Oscar Sosa)
American Airlines' parent company AMR Corporation, in an attempt to drop its enormous debt load and decrease labor costs, filed for Chapter 11 bankruptcy Tuesday, making AA the last major U.S. airline to do so.
AMR Corp. and AMR Eagle Holding Corp. filed voluntary petitions to reorganize, in what was deemed in the companies' and shareholders' best interest, The Associated Press reported.
"American took this action in order to achieve a cost and debt structure that is competitive in the airline industry so that it can continue delivering a world-class travel experience for its customers," read the statement released by the company Tuesday morning.
American Airlines is the nation's third largest airline and the only major airline that had not filed for bankruptcy protection. American has also announced that its president, Thomas Horton, who is also president of AMR, will be replacing CEO Gerard Arpey, who is retiring. Horton has also been named chairman of American.
The airline has said it will be operating as normal – honoring reservations, tickets, refunds, and so forth.
"American's customers are always our top priority and they can continue to depend on us for the safe, reliable travel and high quality service they know and expect from us," said Horton.
According to the AP, American spent at least $600 million more than other airlines because of its labor-contract rules. American has lost $162 million in the third quarter. Meanwhile, of the last 16 quarters, the company has lost money in 14.
A filing with the federal bankruptcy court in New York City revealed that AMR had $29.6 billion in debt and $24.7 billion in assets, The New York Times reported. The airline also recorded that it had around $4.1 billion in short-term investments and cash that is available for vendors and suppliers’ pay.
American Airlines operates out of Miami, Chicago, New York, Los Angeles, and Dallas/Fort Worth. The airline, founded in 1930, employs about 78,000 employees and flies around 240,000 passengers daily.