American Airlines parent company, AMR Corporation, files for bankruptcy

By on Nov 29, 2011 in Business, Finance, United States Comments

AMR Corporation, the parent company of American Airlines and American Eagle, filed for bankruptcy on Tuesday, November 29, 2011, noting that the two companies and their services will still be on normal operations.



Image Credit: Scott Olson/Getty Images

As noted by American Airlines on its official website, AMR Corp. filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

“We took this action in order to achieve a cost and debt structure that is industry competitive and thereby assure our long-term viability and ability to continue delivering a world-class travel experience for customers.” A statement reads at AA.com.

Nevertheless, the company stressed out that operations for American Airlines, AAdvantage program, Admirals Clubs, and American Eagle will still be normal and the filings have no direct legal impact on its operation outside the United States.

According to US news sites, AMR Corporation and American Airlines CEO Gerard Arpey will be retiring and will be replaced by Thomas Horton, the company’s current president.

“Our board decided that it was necessary to take this step now to restore the company’s profitability, operating flexibility, and financial strength,” Thomas Horton was quoted at The New York Times’ DealBook.

The New York Times noted that based on the bankruptcy report filed in a court in Manhattan, AMR Corp. had $24.7 billion in assets and $29.6 billion in debt as of Sept. 30, 2011.

In addition, the company was said to have about $4.1 billion in cash and short-term investments that it can use to compensate its vendors and suppliers.



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