American Airlines’ $30 mln London town house

LONDON,  (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 neighbours.

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 on 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. Corporate restructuring usually involves  sacrifices by staff, retirees and creditors.

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.

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