American Airlines Begins Bankruptcy Process

: Chris Lee Law Firm

  Filed under: Chapter 11

American Airlines bankruptcyThe American Airlines bankruptcy court battle begins today and will mark one of the largest Chapter 11 filings in airline history. After announcing its plans to file last week, American has lost five of its top company officials. As the Fort Worth bankruptcy court opens its doors to airline board members, many will be watching the year long process closely.

Trimming The Fat

American Airlines lists nearly $3.2 billion in special facilities revenue bonds in its bankruptcy filings. It claimed $1.4 billion in unsecured debts and $1.8 in secured bonds, which are backed by either a revenue stream or asset. Since the airline began losing money a few years ago, the value of the bonds has dropped significantly.  Now facing tough choices for how the debt restructuring will take place, American remains consistent with its promises to minimize employee and consumer impact.

As American enters court today, they will be bringing with them a plan to resolve some of their financial woes that does not include consumer or employee cut backs. American executives are hoping to persuade the bankruptcy court to allow cancellation of unused terminal leases around numerous airports. American is also hoping to cancel leases on unused aircrafts, in hopes of freeing up monies to purchase newer aircraft for their aging fleet. Only time will tell what plans the bankruptcy court has in store and how American will weather this financial storm.

 

 


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