This morning, AMR, the company that owns American Airlines, announced it would file for Chapter 11 reorganization in the U.S. bankruptcy court in New York City, explaining, "We must address our cost structure, including labor costs, to enable us to capitalize on these foundational strengths and secure our future. 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."

DealBook reports, "Once the nation’s biggest airline, AMR began to lose ground in recent years as low-cost carriers like Southwest Airlines grew in prominence. Major airlines were forced to respond by cutting fares. As competition intensified, AMR responded by borrowing more and more, eventually pledging nearly all of its assets and leaving it heavily indebted. It also sought to reduce expenses, managing to cut $4.1 billion by the end of 2004. But its principal competitors, including Delta Air Lines and the UAL Corporation’s United Airlines, filed for bankruptcy, shedding billions of dollars in costs and renegotiating labor contracts."

AMR CEO Thomas W. Horton said that customers can "continue to depend on us for the safe, reliable travel and high quality service they know and expect from us" and American will maintain its presence around the world, including in its "cornerstones of Dallas/Fort Worth, Chicago, New York, Miami and Los Angeles." In the short-term, it's unlikely passengers will be directly affected, but longer-term, it's possible flight schedules will be reduced.