American Airlines parent AMR Corp. (AAMRQ) has asked its bankruptcy judge for assurance its Chapter 11 case won't get in the way of its plans to purchase as many as 14 airplanes made by Boeing Co. (BA) next year to refresh its aging fleet.
Looking to avoid a fight with the airline's creditors who are watchdogging its spending throughout its restructuring, the company's bankruptcy attorneys asked Judge Sean H. Lane of the U.S. Bankruptcy Court in Manhattan to reinforce that the company has the power to buy new 777 airplanes at will until the end of next year.
The company also asked Judge Lane to approve the procedures the airline would use to execute the purchases of the airplanes, including giving notice to the company's official committee of unsecured creditors and allowing them enough time to object to the spending.
"The proposed procedures permit the [company] to carry out routine aircraft purchases, which are vital to their ongoing operations, in an efficient and economic manner," AMR Corp. attorneys said in court papers.
Judge Lane is expected to look over the proposal, which requires his approval, at a July 19 hearing. In court papers, airline attorneys reminded the court they got authorization early on in the case to continuing buying and leasing aircraft, for the most part without much restriction.
"Out of abundance of caution...and to allay any concerns of Boeing, the [airline and its affiliates] are seeking approval of the procedures," the company said in court papers.
AMR filed for Chapter 11 protection in November after failing to negotiate new union agreements that would have helped it cut $2 billion in yearly costs. Throughout the case, attorneys have tried to hammer out less-burdensome labor agreements while weighing a merger with US Airways Group Inc. (LCC).
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com.)
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