American Airlines' parent company AMR Corp. filed for bankruptcy protection Tuesday to unload massive debt acquired by years of soaring fuel prices and labor costs.
An AMR Corp. passenger plane [File photo]
The country's third largest airline also said Tuesday that its long-serving chief executive Gerard Arpey would resign and be replaced by company president Thomas Horton.
Under its Chapter 11 filing in a New York court, the company listed assets of about 24.72 billion U.S. dollars, with liabilities of 29.55 billion dollars. The company said it has 4.1 billion dollars in cash.
AMR said it sought protection to reduce its costs and debt to remain competitive. Normal flight operations will continue during the Chapter 11 procedure.
AMR was the only major U.S. carrier that had avoided filing for bankruptcy in the past decade. Its main rivals, United Continental and Delta, had taken the move to restructure labor agreements and cut costs.
That left AMR with the highest costs in the industry, and the only major airline that still must fund worker pensions.
The airline said labor-contract rules force it to spend at least 600 million dollars more than other airlines. AMR has been in labor talks with its pilots for five years, but a failure to reach an agreement earlier this month sparked speculation of bankruptcy filing.
The company was also suffering from soaring fuel prices that sent its costs 40 percent higher in the third quarter compared to the same period in 2010.
Jet fuel costs reached a 30-year high of an average of 3 dollars a gallon so far this year, even higher than the 2.96 dollars a gallon in 2008, when crude prices hit a record high of 147 dollars a barrel.
American Airlines saw losses in 14 of the last 16 quarters, and lost 162 million dollars in the third quarter.
AMR shares price closed at 1.62 dollars on Monday, near its lowest levels. The company's market value has plummeted about 75 percent since the beginning of the year.