American Airlines Files for Bankruptcy Protection

American Airlines - H 2011
Joe Raedle/Getty Images

American Airlines - H 2011 

CEO Gerard Arpey steps down as the third largest U.S. flyer and its parent company seek to cut costs and unload an enormous debt.

American Airlines and its parent company, AMR Corp., announced Tuesday plans to file for Chapter 11 protection to attempt to unload a large debt accrued from years of high jet fuel prices and ongoing labor struggles. 

It was also announced that CEO Gerard Arpey had stepped down and has been replaced by company president Thomas W. Horton, the Associated Press reports

PHOTOS: Busted! 12 Hollywood Stars Who Got in Trouble on Airlines

The company, which was the only major U.S. flyer not to file for bankruptcy following the September 11 terrorist attacks, which triggered a long-running slump in the industry, has continued to lose money over the last two years as other companies began making profits again. 

Horton said AMR Corp.'s board of directors unanimously decided to seek Chapter 11 status after meeting Monday in New York and again by conference call Monday evening. 

STORY: Southwest Airlines CEO Defends Leisha Hailey Removal; Company Touts GLBT Outreach 

The airline said its AAdvantage frequent-flier program will not be affected and it will continue to operate flights, honor purchased tickets and take reservations during its bankruptcy reorganization. 

However, Horton said the projected spin-off of its regional line, American Eagle, which was scheduled for early 2012, will be delayed. AMR Eagle Holding Corp. also filed for bankruptcy. 

STORY: Whitney Houston Nearly Kicked Off Plane for Refusing to Buckle Seatbelt (Report)

Horton also cautioned that job cuts should be expected and the airline will likely "modestly" reduce its flight schedule. 

American, which was founded in 1930, was formerly the country's largest airline, but has fallen to third place behind United and Delta in recent years.