Oh No American Airlines Is Bankrupt & I Have Tickets!
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.
Happy Flying!
AA has handled its Chapter 11 announcement well. I had an email from AAdvantage telling me it is business as usual as they reorganise. I knew that,but it was decent of them to tell me personally.
“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.”
You are probably right especially in the short term, but with a Chapter 11 filing, legally American no longer controls its destiny. Its creditors and the bankruptcy court will decide which, if any, elements of American will survive intact after the filing and which will be sold to others.
Keep in mind that American does not offer in any significant way a unique product that others could not easily offer. As you know, this is largely a commodity business.
Don,
While American Airlines is not in control of its destiny at the moment, the airline and its core business which directly impacts travelers will survive for the foreseeable future. The airline needs to reorganize, but it is not insolvent … nor is it being liquidated. As travelers can only purchase tickets 330 days in advance and the airline is entering an 18 month ‘get out of jail free’ period, in the short term there are no worries.
In the long term American may merge, morph or become something else, but the airline will will shutter its doors and disappear over night.
Happy Flying!
-Fish
Do you still feel the same about booking summer flights to Europe now using planes operated by AA. British Airways uses AA operated flights. I’m hard pressed to find flights at a reasonable price that do not use AA operated flights. My trip is from SFO and is multi-city.
Helen,
American Airlines is stable, operationally, and personally I would not hesitate to book a flight with the airline.
Happy Flying!
-Fish