HolyCoast: American Airlines Files for Bankruptcy Protection

Tuesday, November 29, 2011

American Airlines Files for Bankruptcy Protection

Looks like fuel prices and union woes have taken their toll on America's flagship airline:
American Airlines and its parent company are filing for bankruptcy protection as they try to cut costs and unload massive debt built up by years of high fuel prices and labor struggles. There will no impact on travelers for now.

The nation's third-largest airline also said Tuesday that CEO Gerard Arpey had stepped down and was replaced by company president Thomas W. Horton.

AMR Corp. has continued to lose money while other U.S. airlines returned to profitability in the last two years.

Horton said the board of directors unanimously decided to file for bankruptcy after meeting Monday in New York and again by conference call on Monday night.

American said it would operate normally while it reorganizes in bankruptcy. The airline said it would continue to operate flights, honor tickets and take reservations. It said the AAdvantage frequent-flier program would not be affected.

Horton said, however, that as the company goes through a restructuring it will probably reduce the flight schedule "modestly," with corresponding cuts in jobs.
Obama must be grinning today given that soaring fuel prices and overpaid union workers are both goals of his administration.

I'm glad I cashed in my AA frequent flier miles last year.  Although they claim the program will be unaffected, that's a huge outstanding liability and they're sure to put further restrictions on the program.  I had a heck of a time getting flights for my son using miles (and in fact had to buy some to make it work).  They don't really like it when you use their perks.

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