American Airlines Parent Company Files For Bankruptcy

American Airlines’ parent company, the AMR Corporation, filed for bankruptcy protection on Tuesday in an effort to decrease its labor costs and massive debt. American Airlines says that, for now, it will operate normally and that there will be no impact on travelers or its AAdvantage frequent-flier program.

The Washington Post reports that AMR is the last of the major airlines to file for bankruptcy following the September 11, 2001 terrorist attacks. Although AMR was once the world’s largest airline as recently as 2008, low-cost carriers like Southwest have since emerged, forcing other companies to lower their costs to compete. And rival giants Delta and United merged with Northwest and Continental, respectively, allowed those companies to cut costs and once again profit.

Meanwhile, AMR has posted annual losers three years in a row. Last year saw a $471 million loss, and through the first nine months of this year, AMR lost a reported $982 million. Company officials also state that labor-contract rules forced AMR to spend at least $600 million more per year than other airlines.

"Our board decided that it was necessary to take this step now to restore the company’s profitability, operating flexibility and financial strength," Thomas W. Horton said in a statement. Horton, the company’s former president, was named chairman and chief executive officer on Tuesday, the New York Times reports. He’s succeeding Gerald Arpey, who is stepping down.

To cut long-term costs, AMR is planning on ordering 460 new single-aisle planes from Boeing and Airbus at an estimated $38 billion. American Airlines flies one of the oldest and least fuel-efficient fleets of planes in the country. With the purchases, American Airlines will be able to overhaul its 600-plane fleet and cut between 15 and 35 percent of its fuel costs. Though the company is reeling, American Airlines spokeswoman Andrea Huguely told NYT that it is still the company’s intent to purchase the new planes.