American Airlines filed Chapter 11 bankruptcy due to high labor and fuel costs and the weak economy.
American's parent company, AMR Corp., filed for bankruptcy protection on Tuesday.
This will allow the company to reorganize and to end costly union contracts with their underfunded pension plans.
According to the Wall Street Journal:
AMR Corp., which owns American, was one of the last major U.S. airline companies that had avoided bankruptcy. Rivals United and Delta used bankruptcy to shed costly labor contracts, reduce debt, and start making money again. They also grew through mergers.