In a move that has been both anticipated and expected, AMR, the parent company of American Airlines, filed for voluntary Chapter 11 bankruptcy protection in a New York court this morning. The company listed assets of about $24.72 billion, while it has liabilities of $29.55 billion. AMR said it has $4.1 billion in cash. It also said it is not considering debtor-in-possession financing.
American Airlines had been the only major airline that had not filed for bankruptcy protection in the last decade, leaving it saddled with higher costs for everything from labor to financing. However, American is also the only major airline that has lost money this year. Fort Worth, Texas-based AMR lost $286 million in the second quarter alone.
AMR has also announced a change in their top management position. This morning they named 22-year company veteran Thomas Horton as chairman and chief executive officer of the corporate parent of American Airlines. He will succeed Gerard Arpey, who plans to retire. Horton was named president of AMR and American in July, 2010. He also worked as chief financial officer of AMR and American.
Shares of AMR stock have fallen from a high of $8.89 back in January to $1.61 in today’s pre-market activity.
Impact on American Airlines Passengers
For the 240,000 passengers who fly American Airlines each day, the airline’s bankruptcy filing should have little noticeable impact. AMR Corp., the airline’s parent company, said that it will continue normal flight operations as it heads to federal court to restructure. The move is aimed at reducing AMR’s hefty costs, including for labor.
Delta, United, Continental and US Airways have all gone through Chapter 11. Travelers continued to book tickets. Planes still took off and landed and frequent flier miles were still earned and redeemed.
The only risk to passengers is if the restructuring fails, the airline ultimately liquidates and ceases to fly. Still, many travelers are protected in that case if they bought tickets with a credit card.