AMR’s Luxury Townhouse Property In London May End Up Being Sold As A Result Of Airline Bankruptcy
AMR Corp., parent company to American Airlines, now seeks to cut down on labor costs and shed leases on aircrafts within the court of bankruptcy has also been looking at the pros and cons of selling a multi-million dollar luxury townhouse property in London which has been mostly used by senior executives of the company.
Located at 16 Cottesmore Gardens in the upscale neighborhood of Kensington, within about a half-mile distance from the Kensington Palace where Prince William and Kate Middleton currently reside. The London property was purchased some 20 years ago in 1992 according to the documents which were pulled up by the UK Land Registry. American Airlines had paid 2.85 million pounds, and now it was found to be among $24.7 billion in assets owned by the company as stated in AMR’s filing last month.
Being the 10th most expensive street location within the UK, Cottesmore Gardens holds an average home value of 6.3 million pounds which equates to $9.8 million. The property had undergone renovations by the interior designer Nina Campbell whose other popular works include properties belonging to Prince Andrew and Rod Stewart.
According to AMR, labor costs are one of the major reasons that the company has gone bankrupt. Based in Fort Worth, Texas, the company is expected to make changes to its labor contracts in order to cut down on expenses while also boosting productivity, shed leases on aircrafts, drop various routes, and maybe even terminate the retirement plans for its employees to turn them over to a US pension agency instead. Nevertheless, it is also possible that the company may end up selling the luxury townhouse property.
As AMR goes through their Chapter 11 reorganization, they are set on achieving competitive costs and debt structure. Also part of the reorganization will be reviewing use and ownership of the luxury townhouse as well as any other real estate properties owned by the company.
Properties in Cottesmore Gardens have been reported to have values placed at 2,700 pounds to 3,000 pounds for every square foot although, within the area of the luxury townhouse, the price per square foot is at an average of 1,600 pounds. As far as the luxury townhouse is concerned, people are looking at values of around $30 million.
AMR has dropped around 92 percent in 2011 and have decided to post its fourth consecutive annual loss and yet another loss is expected for the company in 2012.
It has been said that the luxury townhouse has proven to be a good investment for American Airlines as luxury homes in London are a haven for foreign investors during the credit crunch, also adding that the potential of another downtown in Europe adding to why it has proven so. Property prices in central London have moved up by 40 percent since the market hit a low point in March of 2009. Drawing a comparison from figures collected last year, luxury properties in central London have gone up by 12.6 percent.
Conrad Black once owned a London home was linked to the company’s building when these properties were used as a Catholic youth hostel dating back to the 1940s. Black had owned the mansion at 12-14 Cottesmore Gardens before he had decided to sell it for 13 million pounds in order to keep up with his legal bills. Having renounced his Canadian citizenship in order to become a British subject, he had been declared a member of the UK’s House of Lords prior to his conviction for fraud in 2007.
American began its ties to London back in 1982 when it started flying between Dallas-Fort Worth and Gatwick Airport. In May of 1991, it had purchased Trans World Airline Inc.’s routes to London-Heathrow for $445 million. After that, the airline had made expansions on its ties with London which have made it among the leading carriers between North America and London.
AMR is expected to have enough funds to operate as it still has $4.1 billion in cash which means that no outside financing is going to be needed.