TheStreet) -- Eight and a half years after it narrowly averted a bankruptcy filing, choosing instead to honor commitments and maintain defined benefit pensions,
American Airlines and parent
(AMR) have changed course and filed for Chapter 11 protection Tuesday.
Additionally, CEO Gerard Arpey, a career AMR employee with
the rare perspective
that bankruptcy lacks morality, has retired after 30 years with the company.
American came close to bankruptcy in the spring of 2003, but turned aside at the last minute due to deals with unions and Arpey's aversion.
Since then, the carrier has struggled, losing more than $8 billion. In the third quarter, it was the only major carrier
to lose money
. American has said its annual labor costs are $800 million higher than competitors' costs, and the Association of Professional Flight Attendants has disputed the number.
But it is clear that a combination of higher cost and unsuccessful strategy doomed the carrier, which had been the world's largest. Competitors
(DAL - Get Report)
(UAL - Get Report)
both filed bankruptcy and then pursued mergers with carriers who had also cut costs in bankruptcy.
Armando Codina, AMR's lead independent director, said the board asked Arpey to remain. But "we understand and respect his decision to retire and entrust the company he loves to a new leader for a new time," Codina said, in a prepared statement released Tuesday.
"For 30 years Gerard Arpey has given his all to this company, especially during the last decade," he added. "Gerard is a person of exceptional integrity, intelligence and commitment, and he helped our company to achieve amazing things against sometimes staggering odds."
Tom Horton, the new CEO, also applauded Arpey, a friend who urged him to return to American in 2006 after he left to work for four years at
"This is a difficult business in the best of times, and I cannot think of anyone I would rather have worked with or had as a friend for over two decades than Gerard Arpey," Horton said, in a prepared statement. "He is not only a great business leader; he is also a man of honor.
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