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American Airlines Files for Bankruptcy

This article was written by in Travel. 6 comments.


One of the two major airlines that had not yet filed for bankruptcy or restructuring, American Airlines, gave in and filed for Chapter 11 protection today. The airline will continue to operate its business as usual; if you planned to fly American Airlines, you’ll still be able to do so without any problem. In fact, you may even see lower fares and bonus miles offers while the airline looks to maintain customers through the restructuring.

Chapter 11 allows a company to borrow money on more favorable terms and to cancel contracts, and in a market where almost every other airline has benefited from Chapter 11, American Airlines was finding it difficult to compete without the same benefits. That’s not to say the airline isn’t in trouble. As of yesterday, the stock price was down 79.2% for the year, and as of the time I’m writing this, the price has plummeted to a point where it is down more than 97%. The New York Stock Exchange has suspended trading of AMR shares.

American AirlinesFiling for bankruptcy is a reversal of policy from American Airlines, whose spokespeople have long said the company is healthy despite financial losses and the expectation for that lack of performance to continue.

Now might be a great time to purchase American Airlines flights for after the holidays. Since bankruptcy protection is normal for airlines, with Southwest being the only major carrier left never to have filed, there’s no reason to believe American Airlines’ services will be going away anytime soon.

Photo: lrargerich
CNN Money

Published or updated November 29, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 6 comments… read them below or add one }

avatar Mike

Ouch. Can stock holders sue?

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avatar lynn ♦155 (Cent)

I don’t believe they can. The stock becomes worthless as the company will put out a disclaimer. Try dumping it, if the order to halt has not gone through yet.

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avatar shellye ♦107 (Cent)

Something doesn’t add up; AA typically charges more on their airfares than most other airlines, except the occasional ‘deal’ they offer to certain destinations. The airline charges bag fees and fees for all kinds of things that used to be free. Is the price of jet fuel really outpacing earnings that much? I guess I’m at a loss as to how their accounting could be so far off.

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avatar tbork84 ♦1,867 (Half-Dollar)

More goes into this than just their pricing. They also have the highest paid pilots who fly less than the other major airlines. A big worry that comes out from this is what this will mean for Boeing and Airbus, who are in the process of supplying new planes for AA.

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avatar lynn ♦155 (Cent)

I saw a documentary the other night that said pilots are paid 27000 a year. What happened to the high salaries? By breaking contracts in bankrupcy, I’m sure the pilot contracts are included in the deal. So this may be a ploy to lower costs without looking like greedy guys.

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avatar wylerassociate ♦162 (Cent)

So now there are 3 dominant airlines in this country: Continental-United, Delta & American Airlines. I’m curious to see the after effects of this bankruptcy because I expect prices for flights & bags to increase & wouldn’t be surprised if their reward programs are changed.

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