American Airlines Declares Bankruptcy

By | November 29, 2011
AMR Corporation

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AMR Corporation, the parent company of American Airlines and American Eagle, filed for Chapter 11 reorganization today. Their stated goal for this bankruptcy reorganization was to achieve industry competitiveness….or “All our competitors have been through Chapter 11, why shouldn’t we?

The corporation has $24.7 billion in assets and $29.6 billion in debt, as well as about $4.1 billion in cash and short-term investments that it can use to pay off vendors and suppliers. American Airlines was the only major carrier not to turn a profit last year and looks set for another full-year loss in 2011.

Those of you planning to fly with American in the coming months, rest assured flights will operate as normal. Their passengers will continue to get the “best of everything.”

Gerard Arpey plans to step down as chairman and CEO, and will be replaced by C. Tom Horton, currently AMR and American President.

One of the big sticking points in this situation is labor costs. Chapter 11 will allow the company to relieve itself of existing labor obligations and impose new terms. American may come out of this stronger and more financially viable, but it will, to a degree, be at the cost of its employees.

While we understand the need for corporations to make a profit, and want American Airlines to be successful, we cannot help but be saddened on behalf of the employees. Businesses have a tendency to forget that it is the employees who contribute to their success, and corporate executives take massive payouts while demanding cuts from their line personnel.

We can only hope that things will work out the best that they can for all involved. American Airlines has a rich history dating back to the dawn of air travel. Here’s hoping for a glorious future of American “doing what they do best.”

Author: Guru

Guru is the Editor of Flight Wisdom and a long time aviation enthusiast.