American Airlines and American Eagle's parent companies are filing for bankruptcy protection. AMR Corp. and AMR Eagle Holding Corp. said today that they filed voluntary petitions to reorganize, saying it's in the best interest of the companies and its shareholders. American says it sought protection to reduce its costs and debt to remain competitive in the airline industry. American was the only major US airline that didn't file for bankruptcy protection after the 2001 terrorist attacks. American says labor-contract rules force it to spend at least $600 million more than other airlines. Fox News adds that rising jet fuel costs also contributed to the airline's massive debt.
American Airlines CEO Gerard Arpey will step down and be replaced by company president Thomas Horton. The airline will operate flights normally as it reorganizes. (Read more American Airlines stories.)