American Airlines sells … its executives’ swank London townhouse for $23 million
American’s ownership of the spectacular property was especially grating to non-executive employees who took pay and benefit cuts in the early 2000s while the top end rewarded themselves with bonuses.
Lawyers for bankrupt American Airlines asked a federal judge for permission to sell a nearly $23 million London townhouse that company employees see as a symbol of executive power and indulgence.
The five-bedroom house, a short distance from Kensington Palace, where Prince William and Kate Middleton live, has a cash buyer willing to pay 14.2 million pounds, according to a court filing by AMR Corp.
U.S. Bankruptcy Judge Sean Lane approved the sale Wednesday to CG Property Nominees Ltd. of London.
American bought the house, in one of London’s swankiest neighborhoods, in the early 1990s, “when property values were lower,” said Sean Collins, a spokesman for the airline.
It has been used as a residence for executives “responsible for American’s international operations and for corporate functions,” he said.
The current chairman and chief executive officer, Tom Horton, stayed in the house when he was vice president of American’s Europe operation, based in London.
The townhouse, at 16 Cottesmore Gardens, Kensington, came to light when AMR filed for bankruptcy protection in November 2011.
American’s unions expressed anger over the property because in 2003, to keep the company afloat and avert bankruptcy at the time, workers agreed to pay cuts and other concessions.
During the current restructuring, unions have agreed to cost-saving labor contracts. In bankruptcy, companies can trim labor costs, shed aircraft leases, and renegotiate terms with vendors and suppliers.
The London townhouse received attention after the bankruptcy filing “and some questions about it remain unanswered to this day,” American’s flight attendants’ union said in a posting on its website.
“In particular, we cannot help but wonder why the company waited so long to sell the 5,200-square-foot luxury home,” said the union, which along with American pilots, mechanics, and ground workers have publicly supported a merger with US Airways Group Inc.
If a merger does happen, American’s union leaders want US Airways CEO Doug Parker to lead the new company.
In a recent court filing, American said that each month the corporation owns the London property, “the debtors could be subject to unnecessary maintenance costs and other fees.”
“Of course, that did not prevent the company from holding the property until July (conveniently following the Wimbledon Championships), when it was finally put on the market,” noted the Association of Professional Flight Attendants.
James Little, president of the Transport Workers Union International, representing mechanics and ground workers, said it was outrageous for executives to be living in such a posh residence when American workers were being laid off and losing their homes.
“American Airlines would have been Marie Antoinette’s favorite airline,” Little said. “The sale of this asset is a step in the right direction and long overdue. This should have happened before the company entered bankruptcy. Workers, investors, and customers are tired of executives living high on the hog while everyone else sacrifices.”
American repeatedly analyzed selling the London property over the years, Collins said.
“But given the appreciation of the Greater London real estate market, the company felt it was prudent to keep the property until now,” he said.
“The proposed cash sale will enable American to realize immediate funds that will increase the pool of assets available for our creditors.”
(c)2013 The Philadelphia Inquirer. Distributed by MCT Information Services.