The parent company of American Airlines filed for bankruptcy protection on Tuesday, and changed the CEO to overcome a financial crisis that may push the airline to cut its operations. The new CEO, Thomas Horton, said the airline was seeking relief from crushing debt caused by high fuel prices and expensive labour contracts that its competitors shed years ago. For most travellers though, flights will operate normally and the airline will honour tickets and take reservations. American said its frequent-flier programme would be unaffected. AMR Corp., which owns American, was one of the last major US airlines that had avoided bankruptcy. Rivals United and Delta used bankruptcy to shed costly labour contracts, reduce debt and start making money again. The 80-year old American Airlines is the third-largest US airline. It was stuck with higher costs that meant it lost money when matching competitors' lower fares. The Concorde Monitor reported that in announcing the bankruptcy filing, AMR said that Gerard Arpey, 53, a veteran of the company for almost three decades and CEO since 2003, had retired and was replaced by Horton, 50, the company president. Horton said the board of directors unanimously decided Monday night to file for bankruptcy. In a filing with federal bankruptcy court in New York, AMR said it had $29.6 billion in debt and $24.7 billion in assets. In a hearing in a packed bankruptcy courtroom in New York, a judge granted the airline permission to pay for fuel, labour and other critical expenses to keep it flying. The hearing was an indication of how American will now need to run all of its financial decisions past a bankruptcy judge and, ultimately, creditors.
