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American Airlines flies into bankruptcy

By: Jacelyn Woo, Global
Published: Nov 30, 2011

AIRLINE   BANKRUPTCY

Global - American Airlines has filed for bankruptcy protection in an attempt to combat high fuel costs and the sluggish travel demand.

Known as the biggest carrier in the US, its parent company AMR Corp has taken a similar action along with the appointment of a new chief executive.

While the airline is intending to continue operations, it is expected to face issues from the Chapter 11 filing where the pensions of 130,000 employees are affected.

Analyst at Dahlman Rose & Co. Helane Becker believed the airline will need to address more issues in addition to costs despite the bankruptcy filing, Reuters reported.

AMR has yet to announce its next step following the filing, while bankruptcy attorney at Herrick Feinstein Stephen Selbt believed it is still in negotiations.

The company is now in a vulnerable position with the possibility of receiving unsolicited takeover bids from river carriers.

Similar to other US carriers that have found merger partners, an analyst with AirlineFinancials.com and former American pilot Robert Herbst believed there is a 95% chance of American Airlines merging with another carrier in two years.

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