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AMERICAN AIRLINES AND CHAPTER 11 BANKRUPTCY.

AMERICAN AIRLINES AND ITS PARENT COMPANY ARE FILING FOR BANKRUPTCY PROTECTION AS THEY TRY TO CUT COSTS AND UNLOAD MASSIVE DEBT BUIT UP BY YEARS OF HIGHT FUEL PRICES AND LABOR STRUGGLES.

THERE WILL NO IMPACT ON TRAVELERS FOR NOW.

THE NATIONS’S THIRD-LARGEST AIRLINE ALSO SAID TUESDAY THAT CEO GERARD ARPEY HAD STEPPED DOWN AND WAS REPLACED BY COMPANY PRESIDENT THOMAS W. HORTON.

THE ESSENTIAL PURPOSE OF CHAPTER 11 IS TO PRESERVE THE COMPANY AS AN OPERATING CONCERN WHILE A REORGANIZATION PLAN IS WORKED OUT AMONG THE CREDITORS.

IN THEORY, THE COMPANY MAY EITHER FILE A VOLUNTARY PETITION (DEBTOR-IN-POSSESSION), OR THE CREDITORS MAY INITIATE THE PROCEEDINGS THROUGH AND INVOLUNTARY PETITION.

THE REORGANIZATION PLAN MUST BE FAIR, EQUITABLE, AND FEASIBLE.

IF THE FIXED FINANCIAL CHARGES OF THE REORGANIZED COMPANY EXCEED ITS EXPECTED EARNING POWER, THE COMPANY WOULD HAVE LITTLE PROSPECT OF SUCCESS, AND THE PLAN WOULD NOT BE CONSIDERED FAIR, EQUITABLE, AND FEASIBLE.

REORGANIZATION STRIVES TO KEEP THE COMPANY ALIVE BY SCALING FIXED CHARGES AND SUBSTITUTING EQUITY AND LIMITED-INCOME SECURITIES FOR FIXED-INCOME SECURITIES.

AS WE CAN IMAGINE, THE PROCESS COMBINES BOTH ORGANIZATIONAL AND FINANCIAL RESTRUCTURING.

WISHING AMERICAN AIRLINES ALL THE BEST WHILE KEEPING IN MIND THAT PATIENCE IS THE BEST REMEDY FOR EVERY TROUBLE !

PHLDUCX