AMR And American Airlines File For Chapter 11 Bankruptcy Protection

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Breaking: Tuesday, November 29th, AMR, American Airlines and AMR Eagle Holding Company filed for Chapter 11 Bankruptcy protection in the U.S. Bankruptcy Court for the Southern District ofNew York.

Stated Reason

AMR’s Board of Directors determined that a Chapter 11 reorganization is in the best interest of the Company and its stakeholders. Just as with the Company’s major airline competitors in recent years, the Chapter 11 process enables American Airlines and American Eagle to continue conducting normal business operations while they restructure their debt, costs and other obligations.

You can read more through this AA link.

In addition, they have recently failed to gain agreement with labor unions to lower costs. They were also one of the only majors to avoid the recent consolidation in the industry including Delta + Northwest, United + Continental and Southwest + Airtran. Because they missed this round of mergers and acquisitions they’ve dropped to the number 3 US airline. They haven’t benefited from the ability to restructure their costs through the Chapter 11 process and now have higher costs than their competitors.

No Impact To Passengers

American Airlines, American Eagle and All Other Subsidiaries Operating Normal Flight Schedules, Honoring All Tickets and Reservations, Maintaining High Customer Service Levels and AAdvantage Program, and Continuing Employee Pay and Benefits

AMR Has $4.1 Billion in Cash to Ensure Uninterrupted Supply of Goods and Services During Proceedings

Bottom Line

I don’t think there is any elevated risk at the moment for AA miles. When Delta went through bankruptcy in 2005 there were no changes to the award structure. It was after Delta acquired and fully integrated Northwest when they went to the current three tiered award redemption chart. My practice is to always burn miles as quickly as makes sense, after all its a currency that only depreciates with time.

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About The Weekly Flyer

The Weekly Flyer writes about travel from a business traveler perspective. He travels the world every week accumulating points and miles along the way.

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