Businesses going bankrupt immediately conjure up images of windows being boarded up, assets being sold at auction and phone lines going dead … but that is not the case with American Airlines following its parent company AMR filing for Chapter 11 Bankruptcy protection this morning in US Bankruptcy Court in the Southern District of New York
Under Chapter 11 Bankruptcy American Airlines will continue to operate as normal while the airline reorganizes, reduces its debt and lowers its operating expenses rather than liquidate … which is Chapter 7 Bankruptcy.
For travellers who have tickets to fly with American Airlines tomorrow, next week next month, over spring break, everything should go as planned. No need to panic, no need to call the airline and demand a refund, don’t clock up your travel agent’s email box begging them to change your flights … the airline isn’t going anywhere.
While American Airlines’ bankruptcy will impact its employees and creditors, for passengers, nothing will change. You can go to AA.com and purchase tickets, check in for flights and check your AAdvantage account.
If you are an AAdvantage frequent flyer member, your miles are safe and you can still use your miles to book a seat on any American Airlines flight. Want to fly to London on British Airways … you can still use your miles for that too.
Flying to Tokyo on a JAL ticketed code-share flight on an American Airlines plane? Your plane will be there. Flying from London to Kuwait City on an American Airlines ticketed code-share flight operated by Gulf Air? Gulf Air will still fly you there.
Look around at each and every one of American Airlines’ primary competitors, Delta Air Lines, US Airways, United Airlines, each of these airlines entered into Chapter 11 Bankruptcy Protection within the past few years and each of these airlines exited bankruptcy strong and stable … just like American Airlines likely will.
You know what American Airlines has that its competitors didn’t have when they entered into bankruptcy protection? US$4,000,000,000 (yes BILLION) in accessible cash reserves as a liquid asset. Yes … they filed for bankruptcy protection with US$4,000,000,000 in cash in the bank.
So, don’t panic, don’t change your plans or your preferred airline, the sun will rise tomorrow and the skies will be filled with polished silver aircraft for years to come.