Reuters declared on Tuesday Nov 29, 2011 that American Airlines has filed for bankruptcy protection (link) . It is stated that the parent company , AMR Corp, also filed for bankruptcy. The airline company ranking as a third after United Continental Holdings Inc and Delta Airlines Inc. was suffering from high labor costs and soaring fuel prices. The American Airlines American plans to operate normally while Chapter 11 filing process. It is believed that the company can have more flexibility and they can use some tax benefits during the bankruptcy process and so they could manage their liabilities more aggressively according to a Professor of Law, Jack Williams at Georgia State University.
What were the MORE ratings telling about the situation of American Airlines? The ratings assigned to American Airlines Inc. were CC (Pathological) in both 2009 and 2010. The continuously worsening leverage (see the negative shareholders fund values and increasing liabilities) was exhibiting the bad picture. The increase in the total costs has led to losses in spite of the increasing sales values from 2009 to 2010. AMR Corp, the parent company has had the same trend in MORE Ratings: C (extremely pathological) in 2008 and CC (pathological) in 2009 and 2010. The solvency indicators are all showing “no return” levels for the three fiscal years. Soaring operating costs were also visible in the case of the main company resulting in ending the year with a loss. Below both ASKMORE Credit Reports.