Bankrupt airline owns one of UK's priciest homes

Stefan Wermuth / Reuters

This five-bedroom in an exclusive London neighborhood could fetch up to 20 million pounds ($31 million), according to one broker. Owner AMR Corp., the airline company, is in bankruptcy protection with debts of some $30 billion.

By Rhys Jones and Chris Wickham, Reuters

Buried deep in American Airlines' Chapter 11 bankruptcy filing is a striking asset -- a town house in one of London's most expensive residential streets that property experts say could be worth up to $30 million.

The five-bedroom house in London's high-end Kensington district is a throwback to the airline's expansion two decades ago and stands a 10-minute walk from the former home of Princess Diana, with gentry and diplomats as neighbors.

UK regulatory filings show the house has been used as a residence for senior executives, including the current chairman and chief executive Thomas Horton, since the airline bought it in the early 1990s.

Listed as "London Residence LON6526," the five-floor house is one of eight owned properties declared by parent company AMR Corp. when it asked for protection from creditors Nov. 30, sagging under $30 billion of liabilities.

The plush residence in Cottesmore Gardens -- recently named Britain's 10th-most expensive address by property firm Zoopla -- could become a thorn in the airline's side as it fights its way through bankruptcy.

Robert Mann, an airline consultant with RW Mann & Co, who is a former fleet planning executive at AMR, said the ownership of the house is far from the biggest problem the airline is facing but added it would raise eyebrows and should probably be sold.

"As part of an overall debt-clearing exercise, yes it probably should be sold and leased back if they really want to stay there. If you can realize 17 million bucks, you ought to do it."

Confirming ownership of the house, American Airlines said it is used by the senior official in charge of its international business "and for corporate functions from time to time."

Contacted last week, it initially declined to say whether it planned to keep the house, but in response to further Reuters queries said its ownership of the property was being reviewed.

"AMR can confirm that it's a property it purchased in the 1990s when property values were lower," the airline said. "However, as we work through our Chapter 11 reorganization, we are focused on achieving a competitive cost and debt structure and will, of course, review our use and ownership of this and all our real estate as part of that process."

A union representing 30,000 workers at American Airlines and American Eagle expressed outrage over the property.

"In the current economic downturn, many Americans have lost their houses. In this bankruptcy, AMR's executives should lose their house," said James C. Little, president of the 200,000-member Transport Workers Union of America, which is on the airline's creditors' committee.

Source: http://bottomline.msnbc.msn.com/_news/2011/12/14/9449427-bankrupt-airline-owns-fancy-home-as-well-as-planes

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