Company Says The Move Was Made To 'Achieve Industry Competitiveness'

The aviation world woke up Tuesday morning to the news that AMR Corporation, the parent company of American Airlines, Inc. ("American") and AMR Eagle Holding Corporation ("American Eagle"), had filed Chapter 11 bankruptcy reorganization paperwork in the U.S. Bankruptcy Court for the Southern District of New York.

In a news release on the company website, AMR said the move had been taken 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. The filing includes the company and certain of its U.S.-based subsidiaries including American and American Eagle.

AMR's Board of Directors determined that a Chapter 11 reorganization is in the best interest of the Company and its stakeholders. "Just as with the Company's major airline competitors in recent years, the Chapter 11 process enables American Airlines and American Eagle to continue conducting normal business operations while they restructure their debt, costs and other obligations," the company said in the posted statement.

AMR says that American Airlines and American Eagle are operating normal flight schedules Tuesday, and their reservations, customer service, AAdvantage program, Admirals Clubs and all other operations are conducting business as usual.

According to the release, American and American Eagle expect to continue operate normally through the process, including flying its normal number of flights, maintaining salary and benefits for its employees, and paying suppliers. The company said these filings have no direct legal impact on American's operations outside the United States. 

As part of the transition, AMR announced that it has named Thomas W. Horton (pictured) chairman and chief executive officer of the Company, succeeding Gerard Arpey, who informed the Board on Monday of his decision to retire. Horton will also succeed Arpey as chairman and chief executive officer of American. Horton will continue to serve as President of AMR and American. "It is a privilege and an honor to lead this company and I intend to do everything in my power to help restore its position of leadership in the global airline industry," said Horton. "This is a difficult business in the best of times, and I cannot think of anyone I would rather have worked with or had as a friend for over two decades than Gerard Arpey. He is not only a great business leader; he is also a man of honor. With characteristic selflessness, he decided it was time for a new leader to take the company forward and I am grateful for his – and our Board's – confidence. I know we can all count on Gerard's friendship and encouragement as we work to reaffirm American's place among the world's premier airlines."

"The process launched today will no doubt require far-ranging and sometimes difficult change, but it represents an opportunity to rebuild American in a way that assures its ability to compete in a changed world," Arpey said. "I appreciate the Board's confidence in me, but I also believe that executing on this plan requires a new leader for a new time. That is why I informed the Board of my decision to retire and, with my enthusiastic support, the Board decided to appoint Tom as CEO. It has been an honor to serve this company alongside the men and women of American Airlines who have met challenge after challenge with perseverance, skill, determination, and grace. I know they will continue to do so."

ANN reported in July that American Airlines plans a massive fleet replacement that includes orders and options for as many as 300 Boeing 737's, and 260 Airbus A320 family aircraft, with deliveries starting as early as 2013.

FMI: www.aa.com