American Airlines Files for Bankruptcy

American Airlines CEO Gerard Arpey resigned following an unanimous decision by the company’s board of directors to file for bankruptcy protection. Company president Thomas W. Horton replaced him at the helm of the company, announcing that travelers will not be affected by the bankruptcy procedure at this stage. Both American Airlines and its parent company AMR Eagle Holding Corp. are entering a procedure for bankruptcy protection, the board of directors said in a statement.

American Airlines Bankruptcy

The company continued to suffer from heavy loses in the past couple of years, failing to go back to black like other major U.S. airlines. American Airlines would not stop taking reservations and no flights would be canceled due to the bankruptcy reorganization. The flight schedule of the airline will undergo “modest” reduction, while many employees will be fired during the restructuring, Horton said.

According to him, the company’s filing for bankruptcy was driven by numerous factors such as rising fuel prices, global economic downturn, and growing payroll costs. In addition, AMR witnessed loses of $162 million in the third quarter of 2011, with loses being posted in 14 of the last 16 quarters.

At present, the company flies some 240,000 passengers a day, employing 78,000 people. According to the company’s balance sheets, it has some $4 billion in cash.

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