American Airlines goes into Bankruptcy

Just announced (Quotes from SkyNews)

AMR Corporation (holder of American Airlines) made a voluntary filing for Chapter 11 bankruptcy reorganisation, but said it expected to continue operations normally.

Rumours had swirled for months that AMR would file for bankruptcy protection, after an unusual spike in pilot retirements, with the pilots trying to sell off their own stocks in the company."

The airline said in a statement: 'American took this action in order to achieve a cost and debt structure that is competitive in the airline industry so that it can continue delivering world-class travel experience for its customers.'

The airline, which serves 260 cities through an extensive network that reaches 50 countries and territories, said its flights will operate normally.

The company will honour tickets and reservations as usual, and that its code-shares and frequent flyer program are not affected."

Another sign, for a very troubled industry as American Airlines was one of the top 3 US airlines (with Delta & United) All of which have gone bankrupt over the past 4 years.

US Bankruptcy laws are slightly different than ours, they have a Chapter 11 bankruptcy procedure, which roughly means the company keeps trading, the losers are the shareholders first, then unsecured creditors, then creditors and then employees

But also labor contracts can be canceled and new deals started.

Tough for employees although they still have a job, but probably less money.

For consumers maybe lower fares as the airline can compete against other airlines, and the spiral down continues.

Some impact on Qantas as tickets bought by AA, before the declaration, on flights operated by Qantas (codeshare) might not be paid for, as Qantas would be a creditor for these tickets.

Wonder what impact this will have on the psyche of the Qantas staff given their demands which would have some cost impact on Qantas?

http://www.skynews.com.au/businessnews/article.aspx?id=69105…