On the day the Debtors filed their chapter 11 cases, they also filed a motion asking the Bankruptcy Court for permission to assume (i.e. “honor”) certain contracts with third parties. The motion seeks to assume hundreds of agreements that fall into the categories listed below. On Friday, the Debtors added to the list of agreements being assumed, agreements with the International Air Transport Association exhibit.
The motion deals with agreements that fall into the following categories:
- “Interline Agreements” – Agreements between the Debtors and other airlines under which they agree to accept each other’s tickets for transportation over the other airlines’ systems;
- “Clearinghouse Agreements” – Agreements under which the Debtors settle their mutual payment obligations arising under many of the Interline Agreements with other participants of the Airline Clearing House and the International Air Transport Association Clearing House;
- “ARC Agreements” – Agreements involving the Airline Reporting Corporation which serves as a clearing house to enable the refund claims of, and commissions owed to, travel agencies to be offset against the funds owed to airlines from travel agencies and corporate travel departments;
- “Billing and Settlement Plans” – Agreements administered by International Air Transport Association to facilitate sales by foreign travel agents of the Debtors’ transportation services and are the means by which payments for tickets sold by foreign travel agents are settled;
- “Cargo Agreements” – Agreements under which cargo sales agents sell the Debtors’ cargo services;
- “Oneworld Agreements” – Agreements which govern the operation of the Oneworld Alliance (a platform for cooperative marketing efforts among some of the largest airlines in the world) and the relationships of the participating carriers; and
- “Alliance Agreements” – Certain code share agreements, alliance agreements, lounge access agreements, special prorate agreements, joint business agreements, and frequent flyer program agreements with certain airlines and rail companies whereby these airlines and rail companies offer, among other things, transportation of passengers and cargo under American Airlines’ “AA” flight designator code, and under which American Airlines, in certain circumstances, carries passengers under other airlines’ designator code.
The Debtors also request authority to honor certain pre-bankruptcy obligations and to continue honoring, performing, and exercising their rights and obligations in the ordinary course of business, in accordance with the following agreements:
- “Connection Carrier Agreement” – Agreement between AMR and Chautauqua Airlines, Inc. under which the Debtors provide Chautauqua with various marketing services, ground support services, and computer reservations services which enable Chautauqua to continue its operations;
- “Carrier Services Agreements” – Agreements with several Alliance Partners and other international carriers pursuant to which these airlines perform ground handling, reservations, ticketing, maintenance, and similar airport or sales services;
- “GDS Participation Carrier Agreements” – Agreements with SABRE, Galileo International, Amadeus Marketing S.A.R.L., Worldspan, L.P., and others that enable travel agents to price, make, and issue tickets automatically from remote locations;
- “Travel Agency Agreements” – Various agreements related to the Debtors’ travel agency network including: (i) Standard Commission Agreements; (ii) Block Seat Agreements; (iii) GSA Override Agreements; (iv) Travel Agency Incentive Agreements; (v) Ticket Broker Consolidators Agreements; and (vi) other long-term distribution agreements;
- “Booking and Online Fulfillment Agreements” – Various agreements that provide services that are critical in allowing the Debtors to run their website;
- “Cargo Agency Agreements” – Agreements under which the Debtors pay commissions to their cargo general sales agents;
- “ATPCO Agreement” – Agreement under which the Airline Tariff Publishing Company facilitates the publication of airline tariff filings that are communicated by ATPCO to ticket vendors; and
- “Deeds of Undertaking” – Agreements pursuant to which the Debtors are obligated to provide holders of the Debtors’ tickets with assurance that, should the issuer of the ticket (usually a travel agent) fail to remit moneys to the Debtors that were paid by the customer to the travel agent, the Debtors will nonetheless honor the ticket.
An interim order on the Motion has been entered. A final hearing on the Motion is scheduled to be heard on December 22, 2011 at 10:00 a.m. (ET) with objections due by December 15, 2011 at 4:00 p.m. (ET).
LOWENSTEIN SANDLER PC
Sharon Levine, Esq.
S. Jason Teele, Esq.
Nicole Stefanelli, Esq.