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American Just the Latest Airline to Declare Bankruptcy

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Although it sounds serious that American Airlines filed for Chapter 11 bankruptcy, the truth is most airlines have done so at least once in the past. And the airline plans for flights to continue as scheduled during the process.

The news of bankruptcy might set off warning bells in most people’s minds. But passengers of American Airlines don’t have much to worry about despite the fact that the airline’s parent company, AMR Corp., filed for bankruptcy on Tuesday.

The timing might not seem like the best considering the holidays are right around the corner, but the airline says there won’t be any changes to flight schedules. Throughout the process AA will honor tickets and make refunds as usual.

The company filed for Chapter 11 reorganization so it can be more competitive by reducing costs and debts.

When it comes to airlines, bankruptcies aren’t all that unusual. According to AP, there’s a long list of airlines who have filed for bankruptcy. Since 1990 alone there have been a total of 189.

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This is the first bankruptcy for AMR. However, US Airways has filed twice in 2002 and 2004; Trans World Airlines filed three times; and Delta Air Lines and Northwest Airlines both filed on the same day in 2005.

"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,” said Thomas W. Horton, chairman, chief executive officer and president of AMR and American Airlines, in a statement. “Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, 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.”

The company will maintain its frequent flyer program and if you are a member of AAdvantage, then you won’t lose any miles.


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