AMR Corp, parent of American Airlines, filed for Chapter 11 bankruptcy protection this morning. Bankruptcy does not mean going out of business. Far from it, the move will allow the company to restructure and emerge as a more competitive airlines. Travelers will not notice anything different today when flying American and the carrier has pledged the following during their restructuring:
- Provide safe and reliable service
- Fly normal schedules
- Honor tickets and reservations, and make exchanges and refunds as usual
- Fully maintain AAdvantage frequent flyer and other customer service programs, and ensure all AAdvantage miles and elites status earned by members remain secure and intact
- Provide Admirals Club access and similar amenities to members and eligible customers
- Remain an integral member of the oneworld® alliance, of which American is a founding member, and continue its codeshare partnerships
- Provide employee wages, healthcare coverage, vacation, and other benefits, without interruption
- Pay suppliers for goods and services received during the reorganization process
As Gary reasons, this announcement will likely translate into good news for AA frequent flyers. In a bid to keep existing customers and draw in news ones, look for promotions (like status matches and double EQMs) and likely a hands-off approach to the award chart (as others airlines like partner British Airways massively devalue their charts). Your AA miles are very safe.
Of course today’s news has this prouddisgruntled owner of AMR stock fuming. It is not that I did not see the Chapter 11 writing on the wall, I just saw it further down the line. When you play with fire, though, I suppose it is only natural that eventually you get burned. Thankfully my loss will only be four digits and not five…good thing I was not too aggressive…
In general, airline stocks have been an awful investment. Could be worse – could have been Braniff (twice bankrupt).
My sympathies. I made the same calculation you did. Didn’t think AMR would actually go into BK so soon given the cash they were sitting on.to
And we might as well let the speculation on a US merger begin, since Doug Parker has shown interest in more consolidation, and a Bankruptcy could be just the thing to convince him to attempt to buy AA, like he attempted with DL when they were in Chapter 11.
I don’t think there’s any way US could afford the merger, not until AA emerges. I think their greedy union workers played a big role in their excessive operating costs, and lots of them will pay a high price. I like this bankruptcy.