AMR Corporation, the parent company of American Airlines, has filed for bankruptcy. The company announced the decision today, saying that it hoped the move would enable it to “achieve a cost and debt structure that is industry competitive” and to ensure its long-term viability. The airline is expected to continue operating.
The company also announced that Chairman Gerald Arpey will now step down, being replaced by Thomas Horton.
“This was a difficult decision, but it is the necessary and right path for us to take… to become a more efficient, financially stronger, and competitive airline,” Horton said.
“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.
American said that it intends to “maintain a strong presence in domestic and international markets” but admitted that it would need to evaluate its operations to ensure that its network is “as efficient and productive as possible”.
The airline added that the bankruptcy filing would enable it to continue to pay employee wages, fuel, distribution and storage bills, and honour its commitments to frequent flyers other airline partners.
The Texas-based company has been outmuscled in the US in recent, with the mergers of Delta, Northwest, United and Continental taking a growing share of the market. AMR Corp is reported to have debts totaling US$29.6 billion.
American also becomes the second major oneworld alliance carrier to have filed for bankruptcy in recent years, following Japan Airlines in early 2010.