November 29: American Airlines' jets sit at the gate at Sky Harbor International Airport in Phoenix. American Airlines and its parent company are filing for Chapter 11 bankruptcy protection as they seek to cut costs and unload massive debt built up by years of high jet fuel prices and labor struggles. (AP)
FORT WORTH, Texas – American Airlines' parent company is seeking bankruptcy protection as it seeks to unload massive debt built up by years of accelerating jet fuel prices and labor struggles.
The third largest U.S. airline also said its CEO Gerard Arpey will step down. He's being replaced by Thomas Horton, currently the company's president.
Fort Worth, Texas-based AMR Corp., along with its regional affiliate AMR Eagle Holding Corp. said Tuesday that they filed voluntary petitions to reorganize.
American says it sought protection to reduce its costs and debt to remain competitive.
The airline says it will continue normal flight operations during the reorganization.
American was the only major U.S. airline that didn't file for bankruptcy protection after the 2001 terrorist attacks. The last major airline to file for bankruptcy protection was Delta in 2005.
American says labor-contract rules force it to spend at least $600 million more than other airlines.
Besides higher labor costs, American also struggled with rising jet fuel costs. Jet fuel cost an average of $3 per gallon so far this year -- a record according to government data that goes back to 1990. Jet fuel is more expensive now than the average of $2.96 per gallon in 2008, when oil rose above $147 per barrel for the first time. It's risen 56.4 percent in the past five years. The average price of jet fuel was $1.92 per gallon in 2006.
American lost $162 million in the third quarter and has lost money in 14 of the last 16 quarters.
