American Airlines Files for Bankruptcy Protection

American Airlines is taking a major step to pull itself out of a quagmire that has caused the third-largest U.S. airline to absorb loses over the past several years.

AMR Corp., American Airlines‘ parent company, announced on Tuesday that it is filing for bankruptcy protection in a bid to counter the effects of rising costs and debts that have accumulated over the years. In a related development, company president Thomas W. Horton will take over as CEO following the resignation of Gerard Arpey, the Airlines said.

The decision to file for bankruptcy despite having around $4 billion in cash was reached on Monday after meetings by the board of directors, Horton said. The airline said its flights will not be affected despite the bankruptcy filing and the restructuring that is expected to follow. However, Horton said that job cuts could be in the horizon due to the restructuring that is expected to be implemented in the coming months.