AMR To Retain Most Of Fleet In First Stage Of Chapter 11 | AVIATION WEEK
AMR To Retain Most Of Fleet In First Stage Of Chapter 11
Jan 17, 2012
By Darren Shannon
With its first major Chapter 11 deadline looming, AMR Corp. surprisingly has retained most of its leased fleet, although it signals there are more changes to come.
The Fort Worth-based carrier has 60 days from its Nov. 29 filing to issue notices to creditors that it is rejecting its leases. While the company can still address its fleet size at any time through the court-protected reorganization, this is a period usually used to offload aircraft an airline deems superfluous.
With just days left until the Jan. 27 hearing, and its own notice period ended, AMR appears to be holding on to most of its pre-Chapter 11 fleet, with its most recent rejection notice containing just 28 aircraft from the nearly 200 it has on lease.
Included in this rejection are 10 Boeing 757-200s, effectively leaving the airline with only owned 757s, seven MD-80s and a single Airbus A300, a type that has been retired from AMR’s mainline fleet. Previous rejections included 20 MD-80s, four Fokker 100s (also retired)
and 31 ATR 42s from American Eagle’s fleet.
“After reviewing the terms of the leases, the debtors have determined they are of no utility or value to them,” AMR said of its latest aircraft lease rejections.
While retaining most of its MD-80 fleet is a surprise, especially as many are leased, the company’s decision to leave its sizable Embraer ERJ regional jet fleet untouched is notable because it indicates AMR may be attempting to renegotiate its payments to make a regional operation, either wholly owned or spun off as a separate entity, more cost-effective than the airline’s rivals.
Before the Chapter 11 filing, AMR had encouraged the sale of American Eagle with guarantees to cover the operation’s debt obligations. With lower obligations, the sale becomes more attractive and provides the operation with an opportunity to bid against carriers such as SkyWest for new contracts.
But AMR can still alter its fleet, and it makes specific reference to that possibility in its filing. “[I]n view of the large number of aircraft American Airlines has on order, it seeks to accelerate its fleet renewal strategy. To meet all of these goals, the debtors are analyzing the benefits of rejecting leases, selling and abandoning owned aircraft and engines, and contemplating methods for the return and surrender of rejected and abandoned aircraft and engines. As a result, the debtors will seek to retire numerous aircraft and engines from their fleet through rejection and abandonment. This motion is a step in that process,” it notes.