FORT WORTH (CN) – AMR, the parent company of American Airlines and American Eagle, filed for Chapter 11 bankruptcy protection Tuesday in Manhattan, citing the need to cut costs and stay competitive. Its share price fell to 26 cents.
The airline said that company president Thomas Horton is replacing Gerard Arpey as CEO.
The company said in a statement that its airlines “are operating normal flight schedules today, and their reservations, customer service, AAdvantage program, Admirals Clubs and all other operations are conducting business as usual.”
The Fort Worth-based company has been mired in red ink in recent years, reporting losses in 14 of the last 16 quarters, while many other domestic airlines have returned to profitability.
Horton said the company runs at a substantial cost disadvantage to its larger competitors, who have already restructured their costs and debt through Chapter 11.
Until this week, American was the last remaining legacy carrier not to have filed for bankruptcy protection after the terrorist attacks of Sept. 11, 2001.
United and US Airways filed for Chapter 11 protection in 2002, and Delta filed in 2005.
American has fallen to the third-largest domestic carrier behind Delta and United, after they began to buy up smaller carriers.
Horton said the disadvantage “has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges.”
Rumblings of the impending bankruptcy grew louder in recent weeks as negotiations over new labor contracts failed.
Shares of AMR traded as high as $8.85 per share in January before plummeting to $1.62 per share on Monday, before the bankruptcy was announced. Shares closed at $0.26 per share on Tuesday after the bankruptcy announcement.
The company says it has $4.1 billion in unrestricted cash and short-term investments.
“This cash, as well as cash generated from operations, is anticipated to be 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 in accordance with customary terms,” the company said. “Because of the company’s current cash position, the need for debtor-in-possession financing is neither considered necessary nor anticipated.”
The carrier averages 3,300 flights daily, serving 50 countries and 260 airports, including domestic hubs at Dallas-Fort Worth, Chicago, New York, Miami and Los Angeles.
Here are the leading creditors in the bankruptcy filing. All these debts are listed as unsecured.
Wilmington Trust $460,000,000
Manufacturers and Traders Trust Company $357,130,000
Manufacturers and Traders Trust Company $199,160,000
Wilmington Trust $150,000,000
Manufacturers and Traders Trust Company $131,735,000
Manufacturers and Traders Trust Company $126,240,000
Law Debenture Trust Company of New York $115,600,000
The Bank of New York Mellon $108,675,000
Manufacturers and Traders Trust Company $103,000,000
Wilmington Trust $75,759,000
Manufacturers and Traders Trust Company $65,000,000
The Bank of New York Mellon $60,943,156
Manufacturers and Traders Trust Company $49,525,000
Law Debenture Trust Company of New York $39,705,000
US Bank NA $36,160,000
Wilmington Trust $32,162,000
Hewlett Packard $30,862,000
Miami Dade County $25,000,000
Rolls-Royce Inc. $27,000,000
The Bank of New York Mellon $17,855,000