American Airlines said on Tuesday that its parent company AMC Corporation has voluntarily filed for Chapter 11 bankruptcy reorganization and expects to continue operations normally.
American's chairman and chief executive Gerard Arpey also stepped down, and AMR's board of directors named AMR chairman and CEO Thomas Horton as his replacement.
"American took this action in order to achieve a cost and debt structure that is competitive in the airline industry so that it can continue delivering world-class travel experience for its customers," the airline said in a statement.
The airline, which serves 260 cities through an extensive network that reaches 50 countries and territories, said its flights will operate normally and the company will honor tickets and reservations as usual, and that its code-shares and frequent flyer program are not affected.
"We are committed to maintaining a strong presence in worldwide markets. I am confident American will emerge even stronger as a global leader known for excellence and innovation, a travel partner customers seek out, and a carrier that serves communities throughout the world," said Horton, who will also retain his post as AMR chairman.
"It is a privilege and an honor to lead this company and I intend to do everything in my power to help restore its position of leadership in the global airline industry."
Rumors had swirled for months that AMR would file for bankruptcy protection, after an unusual spike in pilot retirements, with the pilots trying to sell off their own stocks in the company.
Shares in AMR have plunged 35% since the beginning of November, leaving the stock at $1.62 before US markets opened Tuesday. At that price, the company has a market value of some $543 million.
In July, American Airlines, which with sister American Eagle has a fleet of 900 planes, announced a massive order for aircraft divided between US aerospace giant Boeing and European rival Airbus.
American said it would buy 200 Boeing 737s and 260 Airbus A320 jets, both more fuel efficient than the aircraft it currently operates.