American Airlines flies into bankruptcy

American Airlines, one of the most iconic carriers in the United States, filed for bankruptcy protection on Tuesday unable to cope with high labour costs, fuel prices and tepid travel demand. American is one of the oldest, and once, the largest US carrier.

AMR Corp, the parent of American Airlines, also filed for bankruptcy and replaced its chief executive.

The company, with 88,000 employees, has been trying to reach settlement with unions without success. Rival domestic and foreign carriers have restructured successfully through bankruptcy proceedings.

American now ranks third behind United Airlines and Delta, both of which used Chapter 11 process to cut costs and merge with other partners.

"The world changed around us," incoming chief executive Tom Horton told reporters on a conference call. "It became increasingly clear that the cost gap between us and our competitors was untenable."

AMR named Horton as chairman and chief executive, replacing Gerard Arpey, who retired.