American Airlines Files For Bankruptcy

Tyler Durden's picture

We hope you used up those frequent flier miles which are now a General Unsecured Claim on thee company and will likely result in an exchange rate of 1 million miles for one round trip flight...


Full press release:


AMR Corporation ("the Company"), the parent company of American Airlines, Inc. ("American") and AMR Eagle Holding Corporation ("American Eagle"), announced that 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, the Company and certain of its U.S.-based subsidiaries (including American and American Eagle), today filed voluntary petitions for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

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.

American Airlines and American Eagle are operating normal flight schedules today, and their reservations, customer service, AAdvantage® program, Admirals Clubs and all other operations are conducting business as usual. Likewise, throughout the Chapter 11 process, American and American Eagle expect to continue to:

Provide safe and reliable service;

Fly normal schedules;

Honor tickets and reservations, and make exchanges and refunds as usual;

Fully maintain AAdvantage frequent flyer and other customer service programs, and ensure all AAdvantage miles and elites status earned by members remain secure and intact;

Provide Admirals Club access and similar amenities to members and eligible customers;

Remain an integral member of the oneworld® alliance, of which American is a founding member, and continue its codeshare partnerships;

Provide employee wages, healthcare coverage, vacation, and other benefits, without interruption; and

Pay suppliers for goods and services received during the reorganization process.

These filings have no direct legal impact on American's operations outside the United States.

Thomas W. Horton, Chairman, Chief Executive Officer and President of AMR and American Airlines, said, "This was a difficult decision, but it is the necessary and right path for us to take - and take now - to become a more efficient, financially stronger, and competitive airline.

"We have met our challenges head on, taking all possible action to secure our long-term position. In recent years, even as the airline industry faced unprecedented challenges, American strengthened our domestic and global network; fortified our alliances with the best partners around the world; launched a transformational fleet deal that will give American the youngest and most efficient fleet in the industry; and invested in our product, service and technology to build a world class customer experience.

"But as we have made clear with increasing urgency in recent weeks, we must address our cost structure, including labor costs, to enable us to capitalize on these foundational strengths and secure our future. Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, 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.

"Our Board decided that it was necessary to take this step now to restore the Company's profitability, operating flexibility, and financial strength. 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," Horton stated.

Horton continued, "Throughout the restructuring process, as always, our customers remain 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. We intend to maintain a strong presence in domestic and international markets, including our cornerstones in Dallas/Fort Worth, Chicago, New York, Miami and Los Angeles. As we and all airlines routinely do, we will continue to evaluate our operations and service, assuring that our network is as efficient and productive as possible.

"Achieving the competitive cost structure we need remains a key imperative in this process and, as one part of that, we plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels."

"American Airlines has a strong, proud history and we will have a successful future. Working through this difficult, but necessary action and process, I am confident we will succeed in enhancing our reputation as a global leader known for excellence and innovation, a travel partner customers seek out, and a carrier that serves communities throughout the world," Horton concluded.

The Company has approximately $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. Because of the Company's current cash position, the need for debtor-in-possession financing is neither considered necessary nor anticipated.

American is filing motions today with the Court seeking interim relief that will ensure the Company's continued ability to conduct normal operations, including the ability to:

Provide employee wages, healthcare coverage, vacation, and other benefits without interruption;

Honor pre-petition obligations to customers and continue customer programs including American's AAdvantage frequent flyer program;

Pay for fuel under existing fuel supply contracts, and honor existing fuel supply, distribution and storage agreements; and

Assume and honor contracts relating to interline agreements with other airlines.

As announced separately today, the Board of Directors of AMR Corporation appointed Horton Chairman and Chief Executive Officer of the Company, succeeding Gerard Arpey, who informed the Board of his decision to retire. Horton will also succeed Arpey as Chairman and Chief Executive Officer of American Airlines and will retain the title of President.

AMR's lead counsel is Weil, Gotshal & Manges LLP and its financial advisor is Rothschild, Inc.

More information about American Airlines Chapter 11 filing is available on the Internet at Information for suppliers and vendors is available at (866) 736-9011 or (703) 286-2757, or by sending an email to

AMR will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of The company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of


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rosex229's picture

Oil prices go up, airlines go bankrupt, economy goes down. Pretty simple equation for the future.

silver500's picture

$200 million in customer money that vanished from MF Global is believed to have surfaced at JPMorgan Chase in Britain

TruthInSunshine's picture

Off topic post here, because it's the first place I could put it this morning for you to all enjoy (or get your blood pressure spiking).

From the new series, 'Hang 'Em High' (alternatively titled: 'History's Greatest Kleptocracy; Is That The Rotten Odor That We Smell?)':

in July 2008, then-Treasury Secretary Hank Paulson met with several hedge fund managers  and told them that a government takeover of Fannie Mae and Freddie Mac was a very real possibility.

How Nank Paulson Gave Hedge Funds Advance Word of Fannie Mae Rescue

The entourage of hedge funders he addressed that day included at least five former Goldmanites who had gone into the hedge fund industry. They also included...

... such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.


*Just a week prior to that meeting, he had testified in the Senate and told media outlets that government intervention in Fannie and Freddie was near impossible.

dwdollar's picture

I like flying, but I wouldn't ride commercial anymore, even if someone paid for my ticket. Between the TSA thugs and the declining budgets for proper airplane maintenance... NO FUCKING THANKS.

trav7777's picture

AMR is bankrupt again??  Weren't they just flying high and in 1st place and shit a few years ago?

Harlequin001's picture

There was a time when bankruptcy meant being taken to the woodshed and shot, once and for all...

Now we're 'kind of bankrupt' or  'a tad bust' or 'maybe you know, just a bit bankrupt but that's ok'.

Maybe one day we'll end this farce and insist that those who borrow real money pay it back, and those that don't work fucking starve until they put some fucking effort in...

pepperspray's picture

I last flew in 2002. I wouldn't even know what to do at the airport now.

Citxmech's picture

No one could have seen this coming. . .


Lemurian's picture

I just flew a few time after 5 years of not flying. Trust me its about as close to unbearable as it gets. 

Pretty soon they'll have subway straps in the aisles and call them "premium" seating


i-dog's picture

"Good morning, ladies and gentlemen. This is your captain speaking. Feel free to get up and go to the toilets during this long flight. Those standing at the back will be more than happy to take your seats."

Harlequin001's picture

I saw a plane once with 'crunchie' written on it, had a guy stood on the fuckin wing...

Now that's cattle class...

Bicycle Repairman's picture

AMR is bankrupt?  Shut down the whole freaking industry for reasons too numerous to mention.  I hate the airline "industry".  Bankrupt?  These guys are subsidized out the wazoo, and always have been.  <bleep> them in the <bleep> sideways.

Harlequin001's picture

Truth, you never know, maybe someone should just shoot the bastard...

There has to be some justice somewhere, even if it's not in the land of the free...

CPL's picture

I've wondered about this. 


Airlines are the first to feel the impact because of their ancient practice in oil futures pricing, but it was the trains that got hit first years ago.  I know there is a revival of sorts because of the annoyances of airports and the perverts they hire at the TSA.  But, trains have been hit.  Both for people transport and food. 

Trucking has been getting clobbered because they download the costs and therefore lower profitability to the driver. Less people get into the industry because getting paid nothing to work long hours on the most dangerous place on the planet if going by numbers, the US highway system kills as many people as heart attacks in the US btw.

This effects North American bike sales and manufacturing because shipping becomes a premium and the cost differences between manufacturing and retail is now a +60% < +200% premium from shop to shelf.  By the time it gets to a consumer, a cheap used car is cheaper by price point.  Obviously not upkeep, remember we are talking about US consumers.  Think hand to mouth.

Airlines.  Too many of them anyways.

My guess is we'll hear news about greyhound or the regional bus-lines dropping dead soon.




 - Increased cost of bikes ---> less bikes sold less profit..etc..



personal cars

Cabs <--- Can adjust meter rates same day, same hour, same minute.


It's a straw man, but there has to be a daisy chain of transport industry that fail one after another.

chubbar's picture

Don't forget that airlines in BK tend to reduce costs through abrogating contracts and renegotiating cheaper wages and pensions. They also stiff vendors through missed payments, renegotiate those contracts and thin margins for those folks as well. The point being that they (BK airline) can then undercut the competition which could also send more airlines into BK, kind of a competitive devaluation type phenomenon. Doesn't bode well for the several hundred thousand airline workers.

Citxmech's picture

Don't forget shipping.

johnQpublic's picture


passengers get groped or irradiated

decide not to fly

airlines go bankrupt


dont tell me i'm the only one who has chosen to forego flying due to ridiculous level of security measures

Sequitur's picture

I'm with you. I try to curtail flying as much as possible. We can afford to travel. But choose not to.

trav7777's picture

I proudly wear my "certified patriot" barcode T-shirt through those groping lines.

PATRIOTS get fondled, terrorists choose not to fly.  What do you have to hide?  The only way to save our freedoms is to destroy them.

Bicycle Repairman's picture

Comrade, the true proletarians have their bar code tattooed on their kiesters.

PurePyrite's picture

I used to fly to my parent's home for Thanksgiving, Christmas, and other family events.  Its an eight hour drive.  I haven't flown since TSA in conjunction with the airlines began molesting children.  It takes longer to get where I'm going, but I save money and can haul more stuff with me.

the tower's picture

Funny thing is that the security measures are only there to make you *feel* secure. It's well known that anyone can smuggle a bomb in his suitcase and have the detonator in his carry-on... The fact that not more planes blow up mid-air means there are no terrorists... and they still keep the security measures up, even though people fly less because of them... The security industry is killing the airlines... then again it 's the same stories with the war-industry, it's killing peace...

e-recep's picture

Recession in USA is just around the corner.

LongSoupLine's picture

That corner was rounded looong ago my friend.

e-recep's picture

I mean the official word.

CPL's picture

That will never happen in the MSM or TPTB.  Too much to lose, namely their heads.

peekcrackers's picture

You mean complete collapse is around the corner

peekcrackers's picture

Hey Buffet ad this in with your collection  why stop @ BoA

I,m sure JPM can use a few of these jets to drop food stamps for the fine peeps onthe U S .

Temporalist's picture

American Airlines is trying to set the record for bailouts.

BW's picture

Aren't they already the record holder?

Iwanttoknow's picture

US airways holds the guinnes book of serial airline bankruptcy.

MachoMan's picture

No way, tax payers always get repaid in full!

AngryGerman's picture

classic crashlanding. but face it, amr has been broke for years

Vampyroteuthis infernalis's picture

Do what is right, just file for liquidation. Save the misery of having a zombie airline.

Carlyle Groupie's picture

Zombie airlines. First thing to go is the maintenance program. Jack screws and fried wiring harnesses bitchez!

Remember once she's inverted there's no coming back.

Instant Wealth's picture

I'll miss those tattooed stewardesses.

unununium's picture

Beware the airline that doesn't file chapter 11 on a regular basis.  It's part of the business model.

darkpool2's picture

Air miles are just a proxy for fiat currencies

Ted Baker's picture


unununium's picture

< BAC hits the 4's today

< later

adyaner's picture

Yep, the corner behind, around 2009, depression ahead...

gojam's picture

Any idea who is owed the $29 billion ?

What's the knock on ?

Miss Expectations's picture

July 20, 2011

American Airlines is excited to announce that we've placed an order for 460 narrowbody planes from Boeing & Airbus. This marks the largest aircraft purchase in history!

Hober Mallow's picture

Fckn pilots. So pretentious.

zilverreiger's picture

So the Rothschilds advised AA a private little jubilee?

I wonder how the suppliers and employees feel about this.

Spooky Polish's picture

Now they'll fly just like Kiwi's do ... 


excuse my english 

LongSoupLine's picture

annnndddd....wait for it....futures are up.

more shocking is Tiffany "missing" earnings.  Boy, the 1% must be really struggling