Skip to comments.American Airlines files for bankruptcy
Posted on 11/29/2011 4:35:29 AM PST by tobyhill
American Airlines' parent company, AMR Corp., announced Tuesday that it has filed for chapter 11 bankruptcy.
The decision comes as the airline tries to "achieve a cost and debt structure that is industry competitive and thereby assure its long-term viability and ability to continue delivering a world-class travel experience for its customers," the company said in a statement Tuesday.
(Excerpt) Read more at money.cnn.com ...
Oh wait, too big to fail? /s
I mean geez, if GM can get a bailout then likewise, United should be entitled to one, as well? /s =.=
Let some of the Methuselah’s bitter angry daughters retire and hire some younger, cheaper, cute stewardesses.
Thanks for posting. Not good. I wonder what is the root cause of their demise?
I have very fond memories of American from back in the 60s.
It was our only non-stop flight form Memphis to New York.
As a young buck I would fly first class on a morning “Champagne” flight to New York. The fare was about $120 r/t and only a few bucks more then coach.
Ohhh, the good old days.
It really has become ridiculous the difference between first class and coach these days. I was checking flights from Colorado to Florida, and the cost was something like three times coach for first class. It’s insane. It’s not nearly that bad on international flights.
....$600 million more in labor costs than its competitors.
AA was the only major US airline to not file for Chapter 11 after 9/11.
Their competitors used Chapter 11 to reorganize and reduce expenses, including their labor contracts. That left AA at a disadvantage.
Boy, ain't that the truth. When I worked in London, I always tried to take British Air -- the staff were good-natured, polite and a lot of fun to fly with. When my boss made the travel arrangements, I always ended up on American where the flight attendants seemed to have been trained in a Hitler Youth Camp. Man, they were miserable.
“Its not nearly that bad on international flights.”
I have no idea what the difference is now.
On international flights, I have usually been happy with coach, but it depends on the airline.
My last US carrier flight was on Delta, Paris to Atlanta.
The stew was coming from behind, taking drink orders.
The guy behind me ordered a coke. She said that will be x dollars.
When she got to me, I said that I had never seen an airline charge for ANY drink, even alcohol, on an international flight.
She snapped back...”well, we are just trying to keep from going broke”.
That was the last time I flew an American carrier.
Most of my European flights were on KLM, which was great.
My last three flights have been on Qatar, between Vienna and Cebu....
great service even in coach, but one time I asked if they could move my flight up one day.
They apologized and said it was not available, but when I checked in for the flight a few days later, they said, “oh, you have been given a free upgrade to business class”.
The selection between five bottles of wine was quite nice :)
There is not one US carrier with more then 3 stars.
Several mid-east carriers, including Qatar, are five star airlines. I think the rest are Asian carriers.
Thanks, justlurking. 9/11 viable. 10 years after not viable. Hmmmm....
AA has been struggling since then, posting losses more often than not. If I remember correctly, they flirted with Chapter 11 a few years ago, but pulled back from the brink. Looks like they aren't going to even try this time.
Of course, the responsibility is spread all around: it's not a black or white issue.
The unions wouldn't give ground without a bankruptcy judge forcing the issue.
I was checking flights from Colorado to Florida, and the cost was something like three times coach for first class.
I’ll let the added labor and service costs offset the fuel savings.
Also, First is relatively cheap if you know how to work the mileage programs. I’ve flown First to Europe on fares (for 2) that were listed at $26,000, but were free with points earned on $200,000 in credit card spending (or the points could have been bought for under $7000).
“I wonder what is the root cause of their demise?”
Of course the meme in the press will be high labor costs.
What you will not read in any of the “in depth” articles on the bankruptcy filing is the fact that American Airlines for years had labor cost advantages over the competition and squandered it.
American Airlines initiated the B-scale. For years, all new pilots hired made half what senior pilots made. That cost advantage was squandered. Did that money go to the shareholders, lower the cost of flying to the public, or grow the airline? No, it went in the pockets of AA management as bonuses.
After 9/11 when every other airline was filing for bankruptcy, the AA pilot labor group took a 23% pay cut to keep AA out of bankruptcy. This was on top of up to a 22% decrease in pay due to schedule cuts.
How many Americans would take a 45% pay cut on top of inflation eating away their earnings? Imagine how healthy the economy would be if every government worker had their pay cut by 45% or even 23%.
What did management do with this cost advantage? They took it as management bonuses. Google - American Airlines management bonus - and read all the stories. This airline was done in by the incompetence and greed of its managers.
Is this the 3rd or 4th time AA has declared bankruptcy?
Thanks anonsquared, PhiloBedo and Crichton. Some insightful posts in the 109 posts and article at zerohedge...here...
I guess pouring through the last 10 years of financial statements would glean more information. Interesting, nonetheless. Viable/not viable.