American Airlines files for bankruptcy

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American Airlines files for bankruptcy
(BDCi) – The AMR Corporation, the parent company of American Airlines said on Tuesday that it had filed for bankruptcy protection in an effort to reduce labor costs and shed a heavy debt burden.

AMR was the last of the major legacy airline companies in the United States to file for Chapter 11. Analysts said that its reluctance to do so earlier made it less flexible than many of its competitors.

The company plans to go ahead with business as usual throughout the bankruptcy process, just like previous airlines have done. It does not believe this will affect the flight schedule or frequent flier programs.

One of AMR’s chief goals in bankruptcy will be to lower its labor costs.

The company had been in contract talks with its unions until negotiations came to a halt earlier this month when the pilots’ union refused to send a proposal to its members for a vote. Since bankruptcy rules allow companies to reject contacts, AMR may get harsher with its unions.

Once the nation’s biggest airline, AMR began to lose ground in recent years as low-cost carriers like Southwest Airlines grew in prominence.

By: Natania Levine
Courtesy: nytimes.com
Photo: cnn.com
29 November 2011
10:32 a.m P.S.T

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