American Airlines Plane Takes Off

The holiday season is usually a time to spend, spend, spend, but American Airlines’ parent company, AMR Corporation, has filed for bankruptcy to reduce labor costs and shed billions of dollars in debt.  According to the New York Times, AMR is the last of the major legacy US airline companies to file Chapter 11.

For the past 3 years in a row AMR has posted losses, including a $471 million loss last year. Major airline companies cut their costs as a way to compete with low-cost carriers like Southwest Airlines.

So what does American Airlines’ bankruptcy mean for travelers? Well, company officials say it’s business as usual, and the airline will operate normally throughout the bankruptcy process. And you can rest easy if you’re enrolled in one of American’s frequent flyer programs. Plans to restructure the company are not expected to affect the number of travel miles you’ve clocked.

I have to admit I was a little worried at first, especially after I doing a little fare surfing last night for a cheap airplane ticket to Miami. Today, I received an email telling me not to be alarmed about my membership to the AAdvantage frequent flyer program.  Part of the email states:

“The AAdvantage miles that you’ve earned are yours and will stay yours, subject to usual policies, until you choose to redeem them for a great award with us. Likewise, your elite qualifying miles and your elite status, including lifetime status granted under the Million Miler program is secure and remains intact.”

So no worries for now, frequent flyer members will still be able to redeem miles for flights, upgrades, car rentals and hotels.  The airline has plans to create more opportunities for frequent fliers to earn miles and redeem them for more perks.

That’s great news for travelers, but it’s a different story for unions.  American had been in contract talks with unions until the negotiations stalled earlier this month when the pilots’ union refused to send a proposal to its members for a vote.  Federal bankruptcy rules allow companies to reject a contract, which means AMR may take a harder stance on negotiating with its unions.

In addition to labor negotiations, contracts to lease aircrafts may be halted due to AMR’s bankruptcy.  AMR officials say the company had “no choice” but to begin canceling contracts on a number of planes, stating that the carrier could not afford to maintain all of its leased aircraft at their current rates.

Regardless of the fallout from its bankruptcy filing, AMR has already made plans to introduce new planes, Airbus A320s and Boeing 737s, to replace the company’s older planes. The airline could see an upturn in profits like Delta and United Airlines did. Delta partnered with Northwest, and United teamed up with Continental, allowing those airlines to finally make a profit.

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4 Responses

  1. DBCoop says:

    Admittedly, American Airlines is not at the top of my favorites list, but who knows, after the Chapter 11 reorganization, my views, and American Airlines fortunes may change. (Although my views and AA fortunes are certainly not linked by any means!) Nope, they're on their own in the financial turnaround process. My few dollars spent on airfare won't make or break those folks.

    So, since Delta has merged with Northwest, and United joined up with Continental to empower the friendly skies and fill that well with the black ink of profitability, who will join hands in marriage, in sickness and in health, with American? My first thought was US Airways. Funny though, I found out that media speculation has already beat me to it.

    Now US Airways isn't very high up on my list of favorites either, so a merger between the two would be, well, not especially tempting for me personally. Once again, however, I'll listen to the frequent travelers, and take my travel and ticket buying cues from the pros. If they say American's the only one to fly, I'll put my opinions on standby and give them a try, full fare if need be.

    Besides, since I'm at the mercy of the cruise line that will book my flights early next year to meet the ship on the East Coast and my return from Europe, I could end up flying the new and improved American Airways after all — post merger!

    In the meantime, hold on to my AAdvantage miles. I've got plenty of work, or rather flying, to do before I quality for that next frequent flyer-miles trip. And please, AA, go easy on those checked bag fees. That's already a sore point with me.

    Now, time to turn off the laptop, check my seatbelt, and find out if my seatmate can carry on a lively conversation for more than two minutes. Full throttle ahead!

  2. DBCoop says:

    Additional thoughts on a potential American Airlines, US Airways merger — or maybe not. Recent news articles have stated that the two airlines in question have declined to make any statement on such an idea, or whether they have even had any discussions about a possible merger. Still, chances are good that they will. It would make sense for both carriers — American would add US Airways hubs in Phoenix AZ, Charlotte N.C, and Philadelphia. US Airways has a strong presence in the Southwest and the Southeast, where American is relatively weak. On the other side of such a venture, American has a wide-ranging, well-established route system in Latin America, and among other assets, includes strategic partnerships with British Airways and Japan Airlines. American's network is also solidly entrenched in a number of the top US markets. Besides, U.S. Airways CEO Doug Parker, a long-time advocate of strength through mergers, would be a valuable asset to aggressively reposition a slimmer, financially invigorated combination of the two carriers once again into the top rankings of US airlines.

    As long as frequent flyer miles maintain their buying and flying power, and customer service and satisfaction improves on all fronts, what's not to like? I'd be willing to give US Airways another try down the road, and keep an open mind about raising my opinions and ratings of American. The proof is in the pretzels, or peanuts, or whatever it is airlines are begrudgingly handing out to flyers these days.

  3. Alzito says:

    I,m a frequent flyer from AA and wen I try to pay my ticket with my miles they never have available is'nt this a night mare? shame on AA

  4. Alzito says:

    I,m a frequent flyer from AA and wen I try to pay my ticket with my miles they never have available seat, is'nt this a night mare? shame on AA

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Kwin MosbyKwin is Managing Producer of TravelChannel.com. His multimedia career has included working as a TV news reporter/producer and publications editor. What inspires Kwin to travel? It’s relaxing beach locations, vibrant...

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