AMR files for Chapter 11

American Airlines parent company, AMR, applied for US Chapter 11 bankruptcy last week in a bid to cut costs, combat soaring fuel prices, and re-organise itself.  A member of the oneworld consortium, and partner to British Airways on the North Atlantic, the airline says that passengers nor schedules will be affected.  However creditors certainly will although it says that the move has no direct legal impact on operations outside the United States.  Major orders with both Airbus and Boeing may have to be re-negotiated. 

Once the biggest US carrier, American now ranks behind United and Delta both of whom in the past have taken the same legal route in successful moves to cut labour expenses and trim outgoings.

However some analysts question whether restructuring will address operational shortcomings and bolster revenue, questioning the airline’s place in hierarchy of North American carriers.  With the legal restraints imposed it could be open to a take-over.

Gerard Arpey, who has been Chairman and Chief Executive since 2004, has retired, replaced by Thomas Horton, a long time staffer at the airline and originally a financial analyst.  AMR has listed assets of US$24.72bn and liabilities of US$29.55bn with US$4.1bn in cash. www.aa.com

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