No impact on C.R. flights from American Airlines bankruptcy

CEDAR RAPIDS -- No schedule changes have been announced by American Eagle Airlines for The Eastern Iowa Airport in the wake of Tuesday's Chapter 11 bankruptcy filing by the commuter airline and its corporate parent, AMR Corp.

AMR, also the corporate parent of American Airlines, filed for reorganization in U.S. Bankruptcy Court for the Southern District of New York to cut costs and combat soaring fuel prices and dampened travel demand. The third-largest airline said its fuel costs rose 40 percent in the third quarter.

American Airlines spends $3,008 on salary and benefits for every hour each of its 600 planes is flown, according to AirlineForecasts, a Washington, D.C., research and investment firm. United spends $2,801, Delta $2,587 and US Airways $1,991.

Those higher labor costs, combined with higher fuel costs and reduced travel demand, created a $162 million quarterly loss for AMR, while Delta and United had a combined profit of $1.2 billion. AMR, which has posted losses in 14 of the last 16 quarters, has lost more than $10 billion since 2001.

AMR shares were hammered Tuesday on the New York Stock Exchange, losing almost 84 peercent of their value to close at 26 cents per share, down $1.36 from Monday's close.

American Eagle connects Eastern Iowa with Chicago and Dallas-Fort Worth. Pam Hinman, marketing director for The Eastern Iowa Airport, said the airline has been flying an average 70 percent full to both destinations.

Hinman said American Eagle is current in terms of its landing fees and rent for the common area of the passenger terminal. It will owe $51,754 on Dec. 1 for November landing fees and common area rent.

On a year-to-date basis in 2011, American Eagle has 27.6 percent of the Cedar Rapids market, second only to United Express with 29.3 percent of the market.

Rockwell Collins in Cedar Rapids is listed as one of AMR''s 50 largest creditors with the airline owing $2.7 million. It is the only Iowa company among the airline's largest creditors, which are mostly outstanding bond funds, private equity funds and debentures.

Chapter 11 bankruptcy allows a company to reorganize its finances while being protected from creditors. In its bankruptcy filing, AMR said it had $29.6 billion in debt, $24.7 billion in assets and $4 billion of cash to tap for ongoing operating expenses.

American was the only major U.S. airline that didn't file for bankruptcy protection in the aftermath of the 2001 terrorist attacks that triggered a deep slump in the airline industry. The last major airline to file for bankruptcy protection was Delta in 2005.

AMR's Chapter 11 filing also leaves it vulnerable to unsolicited takeover bids by rival airlines. If for some reason AMR is unable to reorganize, it would file Chapter 7 bankruptcy, which would mean liquidation of the airline and its assets.

Even then, travelers would be protected if they purchased their tickets with a credit card. Frequent flier miles likely would be picked up by other airlines.