BA says transatlantic joint venture continues after American enters Chapter 11
30.11.11
British Airways and Iberia parent IAG has said its transatlantic joint venture with American Airlines will continue to operate as normal after AMR Corp, the US airline's parent company, filed for bankruptcy protection.
IAG said in a statement: ‘We have every confidence in the future of American Airlines. We are pleased they are taking this step which shows commitment and determination. Our joint business, which is a revenue sharing agreement, continues to operate as usual.'
AMR Corp filed for voluntary Chapter 11 bankruptcy protection yesterday after failing to reach an agreement with pilots earlier this month to cut its costs. American said the bankruptcy would have no direct legal impact on operations outside the US and it was not considering debtor-in-possession financing.
AMR had been the only major US airline to avoid bankruptcy proceedings in the past decade, a move its rivals had used to restructure their employment agreements and debts to cut costs. Most other US airlines filed in the wake of the 9/11 terrorist attacks in 2001. The airline said it expected to continue normal business operations throughout the reorganisation process.
In a statement issued yesterday, the airline said it needed time to address its cost structure, including its labour costs which are higher than its competitors. It said: ‘Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges.'
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