Bloomberg News

AMR Bankruptcy Deals ‘Blow’ to Region Airline Put on the Map

November 30, 2011

Nov. 29 (Bloomberg) -- The bankruptcy of American Airlines parent AMR Corp. deals a blow to the Dallas-Fort Worth region of Texas, a community whose identity and fortunes have been tied to the company and aviation for more than 80 years.

American Airlines is the second-biggest employer in the region, with more than 20,000 of its 80,000 workers based there, and has had a presence in Dallas-Fort Worth since 1929. About one in six jobs in the region is related to transportation, trade or airlines, including American and Dallas-based Southwest Airlines Co., according to the North Texas Commission.

“American has been so much a part of who we are,” Allan Saxe, a professor of political science at the University of Texas at Arlington, said in an interview. The bankruptcy is “more of a psychological blow, I think, than anything else.”

AMR, once the world’s largest airline, filed for Chapter 11 protection from creditors today, listing $24.7 billion in assets and $29.6 billion in debt. While American and American Eagle airlines continue to fly regular schedules, Fort Worth-based AMR said it may eliminate jobs and trim service to some cities. AMR has said it wants to renegotiate contracts with labor unions.

“We’ll probably see some cuts in wages and benefits for local workers and that’ll ripple through the economy,” said Bernard Weinstein, an economist at Southern Methodist University’s Cox School of Business in Dallas.

‘Block By Block’

Dallas Mayor Mike Rawlings said the bankruptcy will be felt “block by block.”

“I live next door to a pilot and a flight attendant,” he said in an interview. The bankruptcy “impacts their lives, I care about that, so it’s more a personal thing as opposed to a macro-economic level.”

American was created in 1929 by combining smaller airlines, including Dallas-based Texas Air Transport. American’s southern division was later based in Fort Worth, and the company’s 1933 Art Moderne hangar at Meacham Field is on the National Register of Historic Places.

AMR moved its headquarters to Fort Worth from New York in 1979, according to its website. Other corporate relocations, including Exxon Mobil Corp. and J.C. Penney Co. helped make Dallas-Fort Worth the fourth-biggest U.S. metropolitan area.

“That was a real coup for the area, it helped put D-FW on the map,” Weinstein said.

“In a sense that was American coming home.”

Emerging Stronger

American fell from its perch as the biggest airline by traffic after Delta Air Lines Inc. bought Northwest Airlines Corp. in 2008, then slid to No. 3 last year when UAL Corp.’s United Airlines and Continental Airlines Inc. merged.

American may be stronger after the bankruptcy, if it can lower its fuel and labor costs, said Mabrie Jackson, president of the North Texas Commission, which coordinates the efforts of local governments for common municipal projects.

Fort Worth Mayor Betsy Price said she is confident that AMR will be competitive again.

“It makes everybody nervous,” Price said in an interview of the bankruptcy filing. “The other airlines that have been through bankruptcy have all emerged stronger and more efficient we feel certain American will also.”

--With assistance from Mary Schlangenstein in Dallas, David McLaughlin in New York and Phil Milford in Wilmington, Delaware. Editors: Romaine Bostick, John Lear

To contact the reporter on this story: Mike Lee in Dallas at mlee326@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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