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Tulsa Attorney Says Bankruptcy Strategic Move For American Airlines

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American Airlines and its parent company have filed for voluntary bankruptcy. American Airlines and its parent company have filed for voluntary bankruptcy.
New American Airlines CEO Tom Horton speaks to the media Tuesday in Fort Worth. New American Airlines CEO Tom Horton speaks to the media Tuesday in Fort Worth.
Bankruptcy attorney Sid Swinson said the move is intended to keep the airlines competitive. Bankruptcy attorney Sid Swinson said the move is intended to keep the airlines competitive.
TULSA, Oklahoma -

One of Tulsa's largest employers is looking for relief from its massive debt. AMR Corporation, the company that owns American Airlines, says it is $29 billion in debt.

Its leadership said Tuesday that bankruptcy is needed to help the company remain competitive.

New American Airlines CEO Tom Horton announced that the airline has filed for Chapter 11 bankruptcy.

"I think it's the right decision at the right time for our company to move forward," Horton said.

Horton said a number of different factors are behind the bankruptcy, including a weak global economy, fuel prices that have risen more than 60 percent in the past five years, and large labor contracts.

He says the company is spending $600 million more a year than other airlines because of those labor contract rules.

"As part of this restructuring we'll look at everything: we'll look at our fleet; we'll look at our debt structure; we'll look at facilities - all of those things will be in the mix," Horton said.

Horton says American is $29 billion in debt and has $24 billion in assets. He says the company will operate as usual but does expect a modest cut to the flight schedule while keeping its frequent flier program intact.

11/29/2011 Related Story: American Airlines Files For Chapter 11 Bankruptcy Protection

"The path ahead will be hard, but it's a well worn path and we will make the company successful," said Tom Horton, American Airlines CEO.

"This is American Airlines' effort to try and keep up with its competition," said Sid Swinson, a bankruptcy attorney in Tulsa.

He says filing for Chapter 11 should end up being good for American. He doesn't expect any Tulsa vendors of the company to be impacted but says this could end up impacting the more than 7,000 employees at the Tulsa maintenance plant.

"The bankruptcy could be used as a way of terminating the union contracts, and whether it comes to that or not, I don't know -- but it is a potential benefit available to American Airlines that's not available outside of bankruptcy," Swinson said.

American has more than 78,000 employees worldwide and Horton said Tuesday that he does expect some job cuts.

The company will delay the spinoff of its regional airline, American Eagle, which was expected early next year. The holding company for that airline also filed for bankruptcy.

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