Tuesday, December 13, 2011

AMR parent of American Airlines Bankruptcy Filing

American Airlines Boeing 737-800.
(photo: The Boeing Company)
It's been two weeks since the announcement that American Airlines parent company AMR Corp. filed for Chapter 11 bankruptcy protection in New York. As readers of this blog know American Airlines is my airline of choice where I currently hold a platinum elite level status in their Aadvantage program.

However at this point I can only be reassured that the airline will conduct business as usual as it attempts a reorganization process to unload debt built by years of accelerating jet file prices and labor struggles. As any flier who has built a loyalty in one frequent-flier program, it would be difficult to start from the ground up again. In addition as a matter of habit frequent fliers know what to expect of the airline in terms of service and cabin comfort.

American Airlines and American Eagle has contacted customers mainly via email that they would:
  • Fly normal schedules with 3,300 daily flights.
  • Honor tickets and reservations
  • Fully maintain the Aadvantage frequent-flier program, with miles remaining in intact.
  • Continue Admirals Club amenities for eligible customers.
The airlines will also continue to provide employee wages and benefits. It should be noted that American is last of the legacy airlines to seek protection from creditors. News reports indicate the airline reports that is spent more than any other airline to abide by labor-contract rules as it avoided bankruptcy. United and Delta were to able to scrap their existing labor contracts after filing for Chapter 11.

American Airlines JFK Terminal
(photo: Urbanphotoz/flickr)
Even with the bankruptcy announcement being fairly recent that some news outlets are already speculating that one of the major carriers is planning to buy American. That kind of guess work is far too premature.

Coincidentally the filing is the 100th by an airline since 1990, according to the Air Transport Association. Some airlines including Hawaiian Airlines and US Airways, have filed for bankruptcy more than once so it it is amazing that American held out this long. One of the most high-profile filings was the Chapter 7 liquidation of Eastern Airlines in 1991. The ATA does not note that some of the 100 bankruptcy filings comes from smaller unknown carriers such as Mahalo Airlines in 1997, which attempted to complete with Hawaiian Airlines and Aloha Airlines in Hawaii's inter-island carrier market. The list also includes cargo carriers.


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