American Airlines Files For Bankruptcy
The parent company of American Airlines, one of the key air carriers serving Bermuda, filed for bankruptcy protection in the US this morning [Nov.29].
The airline has daily flights to Bermuda from New York and Miami and plans on continuing with its regular schedules while it works through a major corporate restructuring.
According to a report in today’s “Wall Street Journal”, AMR Corp. — which runs American Airlines — filed for Chapter 11 bankruptcy protection so it can restructure its debt load built up after years of labour struggles and rising jet-fuel prices. The number three carrier in the US, the airline also appointed Thomas Horton as the new chairman and chief executive, succeeding Gerard Arpey, who will retire despite being asked to stay on.
“This was a difficult decision, but it is the necessary and right path for us to take—and take now—to become a more efficient, financially stronger, and competitive airline,” Mr. Horton said in a statement.
Until Tuesday, American was the only US legacy airline that hadn’t filed for bankruptcy protection. AMR’s shares were halted premarket and closed Monday at $1.62. The stock is down 54% over the past three months.
The Fort Worth, Texas-based company said both American Airlines and its American Eagle commuter flights are expected to fly normal schedules throughout the Chapter 11 process.
Labour costs have weighed heavily on AMR. American Airlines was the only major carrier not to turn a profit last year and appeared set for another full-year loss in 2011.
“Our very substantial cost disadvantage compared to our larger competitors…has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices, and intensifying competitive challenges,” Mr. Horton said.
The company has about $4.1 billion in unrestricted cash and short-term investments, which is expected to be sufficient to pay vendors, suppliers and other business partners during the Chapter 11 process. .
The “Wall Street Journal” said American plans to keep its huge orders for Airbus and Boeing Co. aircraft, which are due to start arriving from next year, and Mr. Horton said there are no plans for a big shrinkage in its flight schedules.
“We may trim the schedule a bit, but it will be modest,” he said. The move would likely lead to some job losses.
Mr. Horton said an ongoing impasse with pilots over a new contract wasn’t “the final straw” in deciding to file for bankruptcy, citing a range of contributing factors including a credit downgrade and the uncertain economic climate.
Your are kidding me!
unbelieveable…..troubling news
Use up those Frequent Flyer Miles NOW!
DAMN yur right bie…..I got 12K miles and need another 5K to qualify for a freebee…… ;-( sigh X 100
It must be the fault of Dr. Brown and the PLP that American Airlines is filing for bankruptcy.
Good point LaVerne. It sure is his fault, not the PLP’s. Since he started Gombey Air more have been leaving.
Since when did you get your wings, First Officer.
LOL!
A significant reason is due to AA’s labor union LaWerne, one of their highest costs is human capital and this cost is directly influenced by stagnant and often unwilling unions to actually work with the Airline until only their demands are met. Sound familiar LaWerne? All the chapter 11 filing is doing is giving the parent corporation AMR the ability to restructure and get their costs back under management, without having to bow down to the unions.
I’m sorry, I forgot to include BIU President Chris Furbert as being partly responsible. After all he was responsible for the bus operators downing tools a couple of months ago. I’m sure AA’s labour union consulted with him to see how they could stop American Airlines from flying. Keep in mind, “United We Stand, Divided We Fall”!! Trade unionists stick together.
Nah, that’s not true.
You and I both know that this is the work of the Combined Opposition. They, somehow someway, have taken away business from AA in an attempt to bankrupt the airline resulting in them having to reduce travel to Bermuda so they can make the PLP look bad.
Damn whites…
@ Laverne Furbert,
You have it wrong once again: Allow me to correct you!
It’s the UBP/OBA’s fault:)
Dr. Brown and the PLP do no wrong in your eyes:—–
May be the first thing you got right on here Ms Furbert! What I mean is, I bet some people will say just that!
A stupid comment Laverne, but then sarcasm is befitting you however.
Before I scrolled down to read the blogs I was thinking of Dr. Ewart Brown. While I did not appreciate some of the things he did as Premier, no one can argue is pizzazz and charisma when it came to dealing with getting airlift and cruise ships to Bermuda. Look around and see if you can find anyone either side of the House will try to bring in a quality airline like AA.com to Bermuda
American Airlines got lost in the BERMUDA TRIANGLE what a shame but that is what happens when you take customers for granted and charge them for everything during travel. Customers do have a choice to go elsewhere for better deals.
First of all filing for chapter 11 bankrupcy is a way to ensure that the company will keep operating also most of the airlines that served bermuda have all filed a one point before so there is no need to panic ppl
So bitter and sad the loneliness and unhappiness most be hard to bear! so sad!
Good move by AA, and Celebrtity cruises, maybe they are aware of the possibility of Col. Burch becoming Transport Minister in a few months time.
@ clean cut……Shut UP,you sound so stupid! Do you think AA is only cancelling Bermuda or is COl.Burch in charge of every city or country AA flies.
Doesn’t Government pay some airlines to guarantee services to/from Bermuda? Isn’t that how JetBlue and AirTran began regular/seasonal services. And remember Zoom? And remember we used to have non stop service from Chicago on United? AA used to have two daily JFK flights year around? This is what our $35 Airport Departure Tax goes to – airlines payments! Why does no one talk about payments to airlines to secure service in the tourism budgets? Does anyone know which airlines receive payments and which don’t? Or anything about the general terms – capacity, frequency, crew stays, available seats?