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American Airlines Parent AMR Corp. Files for Bankruptcy

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  • American Airlines Parent AMR Corp. Files for Bankruptcy

    American Airlines parent AMR Corp. (AMR) filed for bankruptcy after failing to secure cost-cutting labor agreements and sitting out a round of mergers that dropped it from the world’s largest airline to No. 3 in the U.S.

    With the filing, American became the final large U.S. full- fare airline to seek court protection from creditors. The Fort Worth, Texas-based company, which traces its roots to 1920s air- mail operations in the Midwest, listed $24.7 billion in assets and $29.6 billion in debt in Chapter 11 papers filed today in U.S. Bankruptcy Court in Manhattan. Chairman Gerard Arpey will retire and be replaced by Thomas Horton, AMR said.

    AMR was determined to avoid Chapter 11 in the years after the 2001 terrorist attacks, as peers used bankruptcy to shed costly pension and retiree benefit plans and restructure debt. American later watched as rival carriers combined, giving them larger route networks that were more attractive to lucrative corporate travel customers.

    American was embroiled in negotiations with unions for all of its major work groups as far back as 2006, seeking to boost employee productivity and erase part of what it said was an $800 million labor-cost disadvantage to other carriers.

    The airline’s pilots, flight attendants, mechanics and baggage handlers wanted to use the contract talks to regain some of the $1.6 billion in annual concessions they gave in 2003 to help the company avoid bankruptcy.
    http://www.bloomberg.com/news/2011-11-29/amr-files-for-bankruptcy-protection-in-new-york-as-talks-with-pilots-end.html


    I guess this was expected.
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  • #2
    Sad it has come to this, seemed inevitable, hopefully good results come out of this.

    AA Press Release (Ch.11)


    AA Horton Replaced Arpey


    Other Links
    what ever happens......happens

    Comment


    • #3
      the only sad part about this is that the employees who have all given so much to AA since 9-11 are the ones who will get fucked. all the execs will keep their million dollar positions and fat platinum parachutes, while the little folks take it in the butt. pensions may get wiped out. benefits cut. the "give-back" in the form of a voluntary pay-cut the employees agreed to post 9-11 to keep AA afloat will never be returned as promised etc, etc, etc.

      it is the american (as in the country) way.

      while not every non-US based airline does well, the one thing many do not have to worry about is the ridiculous salaries and out of this world benefit packages that our airlines must contend with because of unionization. even though i was a union rep for 8 years, i never bought into the mentality. our labor laws and the market itself have evolved sufficiently so that unions are not much more than self-serving groups that push the envelope to the breaking point.

      anyway, to my friends at AA, sorry for this and what will almost certainly happen to the little people--the heart of the company.

      Comment


      • #4
        That is a wise decision, at least they will breath fresh air for some time. Delta airlines also filed for Chapter 11 some years ago, and now they are one of the largest airlines.
        A Former Airdisaster.Com Forum (senior member)....

        Comment


        • #5
          Well if you are doing bad then you should file for Chapter 11 and be protected until you can start making money. To make money AA has to have some cuts in operation. Stop flying to places that don't bring you money, down size the fleet by getting rid of old planes. I don't think AA will seize to exist. Fix all your problems and then you can build from that.

          Comment


          • #6
            Not unexpected. It's amazing that AA has held out this long actually. All the other non-LCC airlines in North America went through the process. In the process, every stakeholders are screwed: employees get their salary and pension reduced, shareholders are completely wiped out, and creditors need to take hair-cut.

            The truth is, with all its competitors went through that process in the last 10 years, AA cannot sustain without a major cut in its cost. Its cost is simply too high compare to its competitors.

            Why do airlines need to cut cost so agressively? Frankly, it's because of everyone of us. Look at the air fare and you would find that they haven't risen a lot in the last 30 years. Actually, in many routes, they have fallen dramatically. In 1995, a round-trip economy class ticket from YYZ to HKG cost me $2200 on Air Canada during the Chinese New Year peak season. It has been 16 years, and I just received a promotion email that the air fare from YYZ to HKG round trip is $1005 (OK, plus about $300 of surcharges and tax, so it's about $1400) in 2012's Chinese New Year. Same airline, same season. Even worse, CX's price used to be about $100 higher than AC, but now it's undercutting AC's price, with better service, more frequency (32 flights weekly between HKG and Canada vs. AC's 13 flights).

            Passengers demand lower fare and the airlines are delivering it. 40-50% of their cost is fuel and 25-30% is labor. Fuel cost hasn't been dropping lately and that's beyond their control largely, so how would they deliver that sustained price reduction?
            Next:
            None Planned

            Comment


            • #7
              I definitely have no love for American, but I still hope they get this turned around and survive.

              Crazy thought here: How about a USAirways/American merger NOW?

              Comment


              • #8
                Another thing that drags down airlines is Unions!!

                Comment


                • #9
                  It will be interesting to see how AA's mega aircraft order last July will materialise now.
                  TAP - Transportes Aéreos Portugueses

                  Voe mais alto. Fly higher.

                  www.flytap.com

                  Comment


                  • #10
                    Originally posted by justLOT787 View Post
                    Another thing that drags down airlines is Unions!!
                    But without unions, who sees that the people working for the airlines (or any big companies, for that matter) aren't exploited more than absolutely necessary?

                    Comment


                    • #11
                      Originally posted by Peter Kesternich View Post
                      But without unions, who sees that the people working for the airlines (or any big companies, for that matter) aren't exploited more than absolutely necessary?
                      Good point and that is why Unions wore started a long time a go. But today the Unions are not for the worker but for the union bosses, to make them wealthier. I work for a big American company and our salary personnel are not union and we do good and we don't need Unions. But our hourly staff is Union and they are the laziest bunch of people ever. Another thing is that Union people waste time when it comes to working and getting things done. For example you have four workers and one is working and three are standing around watching the other one work. I don’t think companies will take advantage of the workers any more just because it’s America and if a worker is threatened they will sue the employer. But I have a bad image of unions and no respect for them they just drain companied down.

                      Comment


                      • #12
                        Originally posted by TAP-A343 View Post
                        It will be interesting to see how AA's mega aircraft order last July will materialise now.
                        In many cases the airlines do not own the aircraft they fly - they lease them. I recall from the last GE annual report that they owned around 1,700 aircraft and there are several more such leasing companies. There are financial advantages in leasing rather than buying for large corporations. I suspect AA also leases many of its aircraft and engines.

                        Comment


                        • #13
                          Some unions may be for the bosses, but many are not. Many unions are still absolutely vital in trying to maintain a decent standard of living for their members.

                          You sound like you are lucky in that you work for a company that shows some level of respect and values its employees. Sadly, not all companies have that mentality, and many will do anything and everything they can to lower conditions to unacceptably low levels.

                          Unions have a vital role in the employer-employee relationship, and if they didn't exist, you'd see just how darn quickly corporate greed would see the end of sustainable conditions for employees.

                          Comment


                          • #14
                            Originally posted by MCM View Post
                            Some unions may be for the bosses, but many are not. Many unions are still absolutely vital in trying to maintain a decent standard of living for their members.

                            You sound like you are lucky in that you work for a company that shows some level of respect and values its employees. Sadly, not all companies have that mentality, and many will do anything and everything they can to lower conditions to unacceptably low levels.

                            Unions have a vital role in the employer-employee relationship, and if they didn't exist, you'd see just how darn quickly corporate greed would see the end of sustainable conditions for employees.
                            Hear, hear

                            Comment


                            • #15
                              Originally posted by TeeVee View Post
                              the only sad part about this is that the employees who have all given so much to AA since 9-11 are the ones who will get fucked. all the execs will keep their million dollar positions and fat platinum parachutes, while the little folks take it in the butt. pensions may get wiped out. benefits cut. the "give-back" in the form of a voluntary pay-cut the employees agreed to post 9-11 to keep AA afloat will never be returned as promised etc, etc, etc.

                              it is the american (as in the country) way.

                              while not every non-US based airline does well, the one thing many do not have to worry about is the ridiculous salaries and out of this world benefit packages that our airlines must contend with because of unionization. even though i was a union rep for 8 years, i never bought into the mentality. our labor laws and the market itself have evolved sufficiently so that unions are not much more than self-serving groups that push the envelope to the breaking point.

                              anyway, to my friends at AA, sorry for this and what will almost certainly happen to the little people--the heart of the company.
                              I'm a bit confused by your Post but I think I agree. The Employees have had it good (maybe too good) for a long time. So in a sense what happened was inevitable. Hope they saved some $ during the good times.

                              Problem is Unions seem to have no concept of good times, bad times - they just want more $ all the time. Dangerous to work for Unionised Organisation because your Union might just push too hard & send the Company broke and cost you your job. Put another way be careful what you wish for.

                              Comment

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