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American to continue business as usual during bankruptcy

Dec 07, 2011 Mike Garretson

American Airlines is hoping to receive help with collections relief after years of debt accumulation forced its parent company, AMR, to file for Chapter 11 bankruptcy. The Dallas Morning News reports that AMR lost $868 million during the first nine months of 2011, and is projected to post a net loss of $1.1 billion by the end of the year. This marks the eighth time in the past 10 years that AMR has lost money. However, The Wall Street Journal notes that it still has $4.1 billion cash on hand, which is expected to be enough to pay its vendors, suppliers and businesses partners and continue with its regular business schedule. "American expects to continue normal business operations throughout the reorganization process," AMR said in a release. "American Airlines is operating normal flight schedules, honoring tickets and reservations as usual, and making normal refunds and exchanges. American's AAdvantage frequent flyer program is not affected." Bloomberg adds that by filing, American became the last large U.S. full fare airline to seek court protection from debt collectors - much of the debt the company blames on rising jet fuel prices and labor issues. Thus, one of American's primary goals during Chapter 11 will be to lower labor costs.