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American Airlines is bankrupt! Now what?

By now you've probably heard that AMR, the parent company of American Airlines is bankrupt, making them among the last of the legacy carriers to finally concede to ultra-competitive pricing and sky high oil prices. It's a sad day for stockholders, but like many of the fallen giants they'll pick themselves up, dust off and continue to operate -- albeit a little bit leaner.

This is the second airline that I've followed into bankruptcy. My first, Northwest was back when I was living in Ann Arbor and when I still had unbridled love for all things airplane and travel. That enthusiasm helped me ride through the hard times at Northwest and into the Delta years, and over the course of the transition I even learned a few things in the process. Here's a few things that current and potential passengers can expect:

American knows that their customers especially their frequent fliers are the most important part of the company. Without that revenue they can't expect to survive. So they wont do anything to broadly disrupt operations or disturb the current mileage base. They may make small changes to the way that miles can be redeemed, but they wouldn't dare touch the miles that we currently have.

Similarly, none of the currently booked flights are in danger. If any routes are impacted during the reorganization, American will thoroughly reaccommmodate any passenger and they'll still make it from point A to point B. The airline will also continue to competitively price flights and offer normal service. Providing anything less brings the risk of disturbing the loyal passenger base and losing valuable business.

As with the other airline bankruptices, most of the changes to American will be behind the scenes. Employee benefits and pay will suffer, some routes will shrink and growth will surely stagnate. But American has big plans for growth down the road. This year they made the largest aircraft order in history and they've long been preening Tom Horton to take over as CEO. Bankruptcy is just one more move in this chess game of the airline industry.

[Flickr image via Fly For Fun]

Filed under: Business, Airlines, News

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