Chapter 11 Bankruptcy for American Airlines: What it Means

Chapter 11 Bankruptcy of American Airlines; travel consultant Jody Bear on what it means for you in terms of travel

AMR Corp., the parent company of American Airlines, announced Tuesday that it has filed for Chapter 11 bankruptcy protection so it can get a better handle on its debt, cut labor costs and become profitable once again.

Labor and fuel costs, combined with the mounting pressure to file for Chapter 11 as larger competitor airlines were making similar moves to reorganize themselves and get out of debt, are mostly to blame for the bankruptcy filing. American Airlines is working ”toward becoming a more efficient, financially stronger and competitive airline – one that is even better positioned to deliver to our customers,” AMR Corp and American Airlines CEO Tom Horton said in a video message.

So what effect will this have on American Airlines customers and travelers? Perhaps not much.

“From past experience, this should have no effect on travelers,” said travel consultant Jody Bear of Bear & Bear Travel. “American plans to operate their flights as scheduled. The Chapter 11 filing will allow American to restructure their finances, labor agreements, leases, etc., over a period of many months, if not a couple of years.”

“American Airlines and American Eagle intend to operate normal flight schedules, and our reservations, customer service, AAdvantage program, American Airlines Admirals Club and all other operations are conducting business as usual throughout this process,” American Airlines said on its Facebook page, where it is posting up-to-date information for customers on the Chapter 11 bankruptcy proceedings.

“Rest assured, it will be business as usual at American during this process. We are flying our normal schedules; honoring tickets and reservations, and making exchanges and refunds as usual; and will fully maintain our AAdvantage and other customer service programs. We are committed to meeting your travel needs with outstanding customer service and safety throughout our process. More than 80,000 people at American appreciate your loyalty and look forward to continuing to serve you.”

As for any American Airlines miles you may have, the airline said on Twitter @AmericanAir: “We intend to ensure all @AAdvantage miles remain secure and intact.”

American’s main rivals, including Delta Air Lines and United Airlines, used the bankruptcy courts to reorganize their businesses in recent years and emerged as stronger, more profitable rivals.

For more from Jody Bear and other travel experts on genConnect:

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Tags: airline industry, American Airlines, American Airlines Admirals Club, American Eagle, AMR Corporation, Bear & Bear Travel, Chapter 11 bankruptcy, Delta Air Lines, Jody Bear, travel

Category: Lifestyle, Travel, Views on the News