American Airlines files for bankruptcy


American Airlines has filed for bankruptcy, but that could actually be good news for leisure travelers.

Once the nation’s largest airline, American fell to third and really had no future prospects at all. They were the only full fare airline that has not filed for bankruptcy at least once before. (Several others have already filed twice.)

The parent company of American Airlines, AMR Corporation, has never filed for Chapter 11 before so it had humongous overhead. Much more than any other full fare airline, which in turn put American at an enormous competitive disadvantage.

On top of that, the airline spent fruitless years trying to negotiate labor contracts with pilots that would allow American to be competitive. (American will lose over $1 billion this year at a time when other airlines are making money.)

As for the immediate impact on customers, there will be no change with any tickets and no change to Advantage miles if you have those.

In fact, I’m expecting American to now try to lure skeptical leisure travelers with aggressive discounts over the next six weeks. We already saw this on Cyber Monday with roundtrip fares to Asia that were in the range of around $600 or $700 (plus junk fees) from most parts of the country.

After all is said and done, American Airlines will become a much better airline. They will not go away; they’ll just restructure into a more efficient provider.

American is stuck right now with that nation’s worst air fleet comprised of old, old planes. Now that they’ve filed bankruptcy, American will be able to park some planes, renounce their aircraft leases on others and clean up the books really quickly.

The pilots will just have to suck it up, work harder and make less money. (I know I’m offending pilots by saying that, but it’s the reality of how it will play out.) Another loser in this scenario will be Southwest Airlines because American will now be a stronger competitor.

But as a customer, you’ll see newer aircraft and a crisper operation. They’re sitting on $4 billion in cash, so they have more than enough money to go through restructuring and get the old planes out and the new ones in.


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