Staff Report
Published Nov. 29, 2011

The parent of American Airlines and its regional carrier American Eagle — which serves South Carolina’s three metro airports — announced today that it had filed for Chapter 11 reorganization.

AMR Corp., based in Fort Worth, Texas, said it expects the two airlines “to continue normal business operations while they restructure their debt, costs and other obligations.”

American Eagle serves the state’s major airports in Charleston, Columbia and Greenville with 12 flights daily.

Lynne Douglas, spokeswoman for Columbia Metropolitan Airport, said this morning there were no hitches in American Eagle’s operations.

“We expect American Eagle to operate as normal,” Douglas said. “They've been a great service for us.”

American Eagle offers three non-stop flights daily to Dallas-Fort Worth International Airport from Columbia. Overall, American Eagle accounts for 8% of passenger traffic at Columbia, according to airport records.

The airline offers five daily flights at Charleston International Airport, three to Dallas-Fort Worth and two to Miami International Airport. It offers four flights daily at Greenville-Spartanburg International Airport, all to Dallas-Fort Worth.

American Eagle typically serves S.C. airports with a 50-seat regional jet.

In a statement, AMR said that bankruptcy reorganization is in the best interest of the company and stakeholders.

“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,” said Thomas W. Horton, AMR president and CEO.

One of the company’s aims is to cut labor costs, Horton said.

Analysts noted that the company’s primary competitors, Delta Airlines and UAL Corporation’s United Airlines, emerged stronger after going through Chapter 11 reorganization.

Also, Delta and United merged to gain scale. Delta joined with Northwest Airlines, and United teamed with Continental.

AMR said it still plans to go through with a $38 billion purchase of 460 new single-aisle planes from Boeing Co. and Airbus. The new planes should lower fuel costs by 15% to 35%.

AMR reported that it has $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,” AMR said, adding that it believes there’s no need for debtor-in-possession financing.

In motions filed today with the U.S. Bankruptcy County for the Southern District of New York, American said it would continue to:

• Provide employee wages, health care 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.

The filing also said that AMR had $24.7 billion in assets and $29.6 billion in debt, as of Sept. 30.