In hearing in a packed bankruptcy courtroom on Tuesday in New York, a judge granted the airline permission to pay for fuel, labor, and other critical expenses to keep it flying. The hearing was an indication of how American will now need to run all of its financial decisions past a bankruptcy judge and, ultimately, creditors.

With reductions to the flight schedule, Horton said there would probably be corresponding job cuts. American has about 78,000 employees and serves 240,000 passengers per day.

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Chapter 11 Corporate Reorganization Bankruptcy

  • A chapter 11 bankruptcy is usually filed to reorganize a corporation to make it more effective and pay off creditors slowly over time without shutting down the business. While the reorganization is taking place, a “creditor’s committee” is set up made up of the seven largest creditors to the corporation. This committee oversees the reorganization and protects the creditor’s interests.