American Airlines parent files for bankruptcy protection

— -- The parent of American Airlines filed for bankruptcy protection Tuesday, but company officials said customers shouldn't notice any change in service.

AMR Corp., which is also parent to American Eagle, filed for Chapter 11 reorganization in federal bankruptcy court in New York to restructure the company's debt and costs. The airlines said flight schedules and reservations would operate as usual.

"This is 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 Horton, chief executive of AMR, which employs 88,000 people.

Delta, United, Continental and US Airways all have gone through Chapter 11 reorganizations. American has about $4.1 billion in cash on hand in order to pay for goods and services while the company goes through the process.

American and American Eagle assured customers they would:

•Fly normal schedules with 3,300 daily flights.

•Honor tickets and reservations.

•Fully maintain the AAdvantage program for its 67 million frequent flyers, with miles remaining intact.

•Continue Admirals Club amenities for eligible customers.

•Provide employee wages and health benefits without interruption.

Coinciding with the reorganization, Gerard Arpey retired as chief executive of the company, and was replaced by Horton, who has worked at the company for 22 years.

"Throughout the restructuring process, as always, our customers remain our top priority and they can continue to depend on us for the safe, reliable travel and high quality service they know and expect from us," Horton said.

Seth Kaplan, managing partner at Airline Weekly, a publication that covers the industry, said American will likely reduce its routes, passengers and workers. He guessed that flights from hubs in Dallas and Miami would be safe, but that low-cost competitors in Los Angeles and dominant United in Chicago could reduce American's presence in those cities.

"They will cut airplanes, routes, people almost certainly," Kaplan said. "It's just a question of how much and where."

But Kaplan said frequent-flyer miles should be safe, and perhaps even benefit from more generous offers American could make to keep its loyal customers.

"Those will be safe," Kaplan said. "If anything, American is now going to be offering mileage bonuses to assure them that they'll keep flying."

Texas Sen. Kay Bailey Hutchison, the top Republican on the Senate transportation committee, expressed disappointment with the Fort Worth company's decision. She defended Arpey for trying to avoid bankruptcy and said "he did everything possible to avoid this outcome."

"I remain concerned about the company's pension plan — one of the most generous in the industry — being placed in jeopardy by this unfortunate turn of events," Hutchison said.

Capt. Dave Bates, president of Allied Pilots Association, a union representing 8,000 American pilots, said the bankruptcy filing is disappointing, if not entirely unexpected, because unions reached agreements on labor savings with the company in 2003.

He anticipated "significant changes" to the company's business and to the union's contract during the estimated 18 months it will take to complete the reorganization.