American Airlines’ operations to and from Mexico will run normally despite the announcement this week that its parent company AMR is seeking chapter 11 bankruptcy protection due to significant losses over the last few years.
The filings will have “no direct legal impact on American’s operations outside the United States,” an AMR press release said.
“There won’t be any changes,” said AA’s communications director Martha Pantin, who stressed that the airline is committed to Mexico having added four new routes to Mexico this year.
American currently controls 13 percent of Mexico’s international market share and in October transported 230,000 passengers, 8 percent more than the previous month.
The decision to restructure the airline is the result of stalled negations with unions over the lowering of labor coats.
“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,” said Thomas W. Horton, Chairman, Chief Executive Officer and President of AMR and American Airlines.As well as flying normal schedules, AMR has promised to honor all American Airlines and American Eagle tickets and reservations and frequent flyer miles, and provide employee wages, health care coverage, vacation and other benefits without interruption.
Although AA is taking reservations for flights, FlyersRights.org points out that “there is risk that your ticket will not be honored by AA should their restructuring fail.”
But like many other U.S. airlines that have also filed for bankruptcy, American is likely to survive. Time economic analyst Stephen Gandel pointed out this week that American Airlines is in fairly good economic shape, with four billion in the bank, no looming debt payments and no plans to call off its planned purchase of 460 planes over the next decade.
However, AA has lost money in 13 of its last 14 quarters - five billion over the past three and a half years – so filing for bankruptcy is “a way to force its workers to take lower paychecks and benefits” and “gain the upper hand,” Gandel noted.
Industry analysts suggest American may follow the route of recent mergers between United and Continental, and Delta and Northwest. A likely suitor for a merger could be U.S. Airways, they say.