Last Updated 7:39 a.m. ET
DALLAS - American Airlines' parent company, AMR, filed for Chapter 11 bankruptcy this morning.
The Texas-based AMR Corporation, the parent company of American Airlines and American Eagle, announced that the company and certain of its U.S.-based subsidiaries (including both carriers) today filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York, "in order to achieve a cost and debt structure that is industry competitive and thereby assure its long-term viability and ability to continue delivering a world-class travel experience for its customers."
It says the move is in the best interest of both companies and its shareholders.
The Chapter 11 reorganization process would enable to airline to continue normal business operations.
American said it is operating normal flight schedules, honoring tickets and reservations as usual, and making normal refunds and exchanges.
"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 Thomas W. Horton, Chairman, Chief Executive Officer and President of AMR and American Airlines.
American lost $868 million during the first nine months of this year, and was the only major U.S. airline to lose money last year.
In a press release this morning, AMR said it has approximately $4.1 billion in unrestricted cash and short-term investments, which it is said is "more than sufficient to assure that its vendors, suppliers and other business partners will be paid timely and in full for goods and services provided during the Chapter 11 process."
The Company's current cash position means the need for debtor-in-possession financing is not anticipated.
Our Board decided that it was necessary to take this step now to restore the Company's profitability, operating flexibility, and financial strength," said Horton. "We are committed to working as quickly and efficiently as possible to appropriately restructure American so that it can emerge from Chapter 11 well-positioned to assure the Company's long term viability and its ability to compete effectively in the marketplace."
American has been unable to reach a new cost-saving contract with its pilots. It has been trying to upgrade its aging fleet of planes, and has not merged with another carrier, like many of its competitors.
American was the only major U.S. airline that didn't file for bankruptcy protection after the 2001 terrorist attacks.
Source: http://feeds.cbsnews.com/~r/CBSNewsMain/~3/Fv0DrcV0PsI/
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