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December 24, 2012

No. 8 American makes progress restructuring in Year One of bankruptcy protection

In its first year under bankruptcy protection, American Airlines' parent company, AMR Corp., has accomplished quite a bit.

It has renegotiated leases on hundreds of aircraft and terminated leases on less-fuel-efficient planes. The carrier has also reached new labor agreements with all of its union groups such as pilots, flight attendants, mechanics and ground workers.

It also agreed to freeze its pension plans instead of terminating them and turning over control to the Pension Benefit Guaranty Corp.

And while these moves are part of the restructuring plan AMR has yet to file with the bankruptcy court, the Fort Worth-based company has announced a few other plans that management believes will help American compete more effectively with United Continental and Delta Air Lines.

In May, American unveiled plans to retrofit all of its Boeing 777-200ERs and half of its Boeing 767-300ERs with lie-flat business-class seats, new entertainment systems and "main cabin extra" seats with more leg room. The carrier said the retrofit is scheduled to begin in 2014 and it will cost several hundred million dollars to complete the project.

In September, AMR contracted with regional carrier SkyWest to fly 23 regional jets under the American Eagle brand name, operating out of Los Angeles and Dallas/Fort Worth. As part of its restructuring, AMR wants to use other regional carriers to lower its operating costs.

And in November, American settled its two-year dispute over ticket booking fees with Sabre Holdings. The settlement allows American to continue marketing its Direct Connect software to travel agents and includes a payment of an unspecified amount from Sabre.

-Andrea Ahles


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