Things are not going smoothly for American Airlines, its parent company has announced plans to file for Chapter 11 bankruptcy protection. Does this mean you have to change up your holiday plans?
As if cementing holiday travel wasn’t enough of a pain, travelers woke up to news of a bankruptcy filing out of American Airlines and its parent company, AMR Corp., Tuesday morning.
How Will the AA Bankruptcy Impact Travelers?
As of now, the nation’s third largest airline reassures travelers this agreement will not affect their customers — unless they have stock in the company. Quick to put on a happy face, newly appointed company president Thomas W. Horton tells Bloomberg, “All the people of American Airlines are going to stand tall and deliver for our customers.”
Although frequent flier miles will remain intact, there is still debate over whether or not the airline may make some inconvenient changes once the busy travel season has winded down. Experts are certain the airline will cut down on staff, as well as routes — how many cuts will be made is not yet clear. Terms like “temporary” and “trim” have been tossed around as the company tries to sugarcoat the fact that you may not be able to find convenient flights for a while.
American Airlines Waits Too Long to File
AMR avoided bankruptcy filings in an effort to look out for the unions and their employees, unfortunately these very reasons were the causes of an eventual bankruptcy filing. Stalling negotiations with pilots and labor unions over cost-saving contracts were at the heart of the bankruptcy filing. It’s no surprise the airline went this route as there have been many red flags in the past months.
Filing for Chapter 11 reorganization is actually not that big of a deal as almost all the major airlines filed for the same thing. The difference is other airlines such as Delta, United, Continental all filed for Chapter 11 protection soon after September 11, 2001 — a period during which the airline industry as a whole was struggling. This move allowed the companies to recoup respectively, some even partnering to increase their route networks.
The last two large airlines, Delta and Northwest, filed for bankruptcy in September 2005 which resulted in Delta buying out Northwest. So, this may be a good sign for the future of American Airlines because it will force them to restructure, recoup and potentially provide better services to its customers.