AMR Corporation was an American airline holding company based in Fort Worth, Texas, United States,[2] which was the parent company of American Airlines, American Eagle Airlines, AmericanConnection and Executive Airlines. AMR filed for Chapter 11 bankruptcy protection in November 2011. The company emerged from bankruptcy on December 9, 2013, and at the same time announced that it would merge with US Airways Group to form a new company, American Airlines Group.[3][4]
AMR Corporation was formed in 1982, as part of American Airlines' non-bankruptcy reorganization into a Delaware corporation, its name derived from American Airlines's former ticker symbol on the New York Stock Exchange. In 1984, various subsidiaries previously owned by American Airlines merged and created AMR Energy Corporation; it was involved in creating oil and natural gas resources. In 1986, AMR announced that it would be acquiring Air California's parent company, ACI Holdings, for $225 million.[5]
In 1994, AMR succeeded in achieving profitability, after failing to produce it for three years in a row. Sustained work to reduce its supplier base has been identified as one contributing cause: in 1995, AMR obtained goods and services from 7200 suppliers, but reduced this number by 30% in 1996 and by a further 16% in 1997, achieving cost savings as a result of this consolidation.[6]
In 1998, the company announced that it would sell three of its subsidiaries and focus solely on the core airline businesses. AMR purchased Trans World Airlines (TWA) in 2001, for $742 million. With the acquisition, American became the largest airline in the world and surpassed United Airlines.[5]
On November 29, 2011, AMR Corporation filed for Chapter 11 reorganization bankruptcy[7] with $4 billion of cash.
The decision came as the airline tried to "achieve a cost and debt structure that is industry competitive and thereby assure its long-term viability and ability to continue delivering a world-class travel experience for its customers", the company said in a statement. American Airlines stated that despite the filing it was continuing normal operations.[8] Chairman and CEO Gerard Arpey stepped down and was replaced by company president Thomas W. Horton.[9]
American was the last of the remaining legacy airlines in the US to file for bankruptcy, and thus there are no remaining legacy carriers that have not taken advantage of Chapter 11.
The Air Transport Association group said that unofficial research states that AMR was the 100th airline company to go into bankruptcy protection since 1990.[10]
On December 2, 2011, AMR Corporation was replaced by Alaska Air Group in the Dow Jones Transportation Average.
In February 2012 the company announced that in order to cut operating costs and boost revenue, it would eliminate 13,000 jobs, which amounted to 18 percent (including 15 percent management positions) of American Airline's 73,800 employees. This was projected to cut 20 percent—$2 billion—of operating costs and raise revenue by $1 billion.[11] Since 2001, accumulative losses of the company were $11 billion.[12]
In January 2012, US Airways Group expressed interest[13] to take over American Airlines, followed by the AMR CEO stating, in March, that American was open to a merger with US Airways.[14] US Airways told some American Airlines creditors that merging the two carriers could yield more than $1.5 billion a year in added revenue and cost savings.[15]
On April 20, 2012, American Airlines' three unions said they supported a proposed merger between American and US Airways.[16]
In July 2012, American announced capacity cuts due to the grounding of several aircraft associated with its bankruptcy and lack of pilots due to retirements. American's regional airline, American Eagle, stated it would retire 35 to 40 regional jets as well as its Saab turboprop fleet.
As of September 2012, American's unions were looking to merge with another airline. Reports were the possible merger partners AMR was looking at were, US Airways, JetBlue, Alaska Airlines, Frontier and Virgin America.[17] Indeed, in a July 12 court filing US Airways said it supported an American Airlines request to extend a period during which only American could file a bankruptcy reorganization plan ("exclusivity period"); in the filing US Airways disclosed that it was an American Airlines creditor and "prospective merger partner. On August 31, 2012, US Airways CEO Doug Parker announced that American Airlines and US Airways had signed a nondisclosure agreement, in which the airlines would discuss their financials and a possible merger."[18]
On February 14, 2013, AMR and US Airways Group officially announced that the two companies would merge to form the largest airline in the world. In the deal, which closed in the third quarter of 2013, bondholders of AMR would own 72% of the new company and US Airways shareholders would own the remaining 28%. The combined airline would carry the American Airlines name and branding, while the US Airways' management team, including CEO Doug Parker, would retain most operational management positions. Headquarters for the new airline was consolidated at American's current headquarters in Fort Worth, Texas.[19][20] AMR president and CEO Thomas W. Horton was replaced as CEO by the current CEO of US Airways, Doug Parker.[21] Horton remained as chairman of the merged business, while US Airways president Scott Kirby became president of the merged company.[22]
On August 13, 2013, the United States Department of Justice and six state attorneys general filed a civil antitrust lawsuit to block the merger, arguing it would reduce competition, raise fares, and harm consumers.[23] Two weeks before trial in November 2013, the parties reached a settlement requiring American and US Airways to divest slots and gate access at Ronald Reagan Washington National Airport and LaGuardia Airport to low-cost carriers.[24]
AMR emerged from Chapter 11 on December 9, 2013, and the merger with US Airways closed the same day, forming American Airlines Group.[25] Creditors received full recovery on their claims plus postpetition interest, and AMR's former stockholders received a distribution of approximately 3.5 percent of the new company's equity, an uncommon outcome in airline bankruptcies where shareholders are typically wiped out.[26] American Airlines Group began trading on the Nasdaq under the ticker symbol AAL on December 9, 2013.[25]
American Airlines operated 605 aircraft as of April 2012 with an additional 451 on order.[1] New planes on order consisted of 260 A320neo from Airbus and 200 Boeing 737s over the next five years. The company also held options and purchase rights for up to 465 additional planes through 2025.
American Eagle Airlines, AMR's regional subsidiary, operated 284 aircraft including 39 which are operated by Executive Airlines, another subsidiary of AMR Corporation.
Fifteen aircraft were operated by Chautauqua Airlines under the American Connection brand. Chautauqua was not owned by AMR but operated aircraft for American Eagle.
AMR sponsors the AMR/American Airlines Foundation, a grant-making foundation which supports charitable causes in cities served by AA, in particular the Dallas/Fort Worth Metroplex, Chicago, Illinois, Miami, Florida, Saint Louis, Missouri, and San Juan, Puerto Rico.
AMR Corporation owns a five-story townhouse, London Residence LON6526, in Cottesmore Gardens, Kensington, London. As of 2011, it is worth $30 million U.S. dollars. Many large companies own or rent property for use of executives who are working abroad. When AMR Corporation requested Chapter 11 bankruptcy protection, LON6526 was one of the eight owned properties the company declared.[33] The airline purchased the complex in 1992 for £6.3 million British pounds (US$9.8 million). Nina Campbell, an interior designer, had renovated the property. An AMR spokesperson said that AMR may sell the townhouse.[34] Richard Tilton, a lawyer with specialization in bankruptcy and the director of Sheldon Good & Co., compared the property to the "corporate jets that the executives at GM and Chrysler were forced to give up", and predicted that such "symbols of corporate suite excess" were unlikely to survive the Chapter 11 reorganization.[34]
