10 replies to this topic

[yvonne johnson]

Literally one day after G. buys a transatlantic ticket to the UK on AA, we learn that AA has filed for bankruptcy.

BBC
NYT

[Rail Paul]

Literally one day after G. buys a transatlantic ticket to the UK on AA, we learn that AA has filed for bankruptcy.

BBC
NYT

The airline is expected to continue service while it reorganizes its business. No change in operations or frequent flier plans.

For many years, American Airlines took pride in being the only major US airline not to make a trip through the bankruptcy courts. That journey has been a favored way for other airlines to break union contracts, lease agreements, pension and medical obligations, etc.

Purists would argue that Southwest hasn't been through the courts, but AA has always looked down on SW as a minor carrier.

[Orik]

As RP points out, bankruptcy is part of the business cycle for US based airlines and it's unusual for them to default on their obligations to passengers these days (I think even Pan Am miles survived bankruptcy to become Delta miles). This is in contrast to Mexicana (an AA partner), for example, who offered tickets for sale even when it was clear to the investment community that they're going under, and then simply didn't honor the tickets.

[Anthony Bonner]

one of AA's most valuable properties is their slots at Heathrow. If they stop flying them they could lose the slots, so that ain't happening.

not to mention the front of plane NY-LON is probably the most profitable route in the world.

[Orik]

I'm sure they'll use this mostly to renegotiate pensions and drop some of the uninteresting routes.

It remains a mystery to me how and why they sell JAL tickets at such a huge discount - for example right now you can buy the coach JAL ticket from JFK to NRT for 40% less through AA, and first class for a 25% discount.

[Anthony Bonner]

they've been pretty clear its to renegotiate pensions and union contracts.

[Orik]

Goes to show how closely I follow the news.

Btw, do you know the terms for maintaining the Heathrow slots? I know that in many cases an airline may stop flying for quite a while before they have to give them up, but I don't know the specifics.

[Anthony Bonner]

Goes to show how closely I follow the news.

Btw, do you know the terms for maintaining the Heathrow slots? I know that in many cases an airline may stop flying for quite a while before they have to give them up, but I don't know the specifics.

they are use-it-or-lose-it. you have to fly them 80% of the time, even if its just empty planes. Now the time frame before CAA allocates them back off isn't so precise so I'm guessing you could keep it locked up un bureaucracy for a while.

Slots in the US are not use-it-or-lose-it. However the nature of slot control here is such that they aren't really worth much.

[Rail Paul]

The WSJ reports on a possible Delta Airlines + American Airlines combination. It might not pass with foreign regulators, and could bring anti-trust concerns (Dallas would be a good guess).

I wonder if British Airways would consider a counter bid, and hope they could buy congressional and regulatory approval?

A potential merger of Delta and American Airlines parent company AMR might win domestic antitrust approval, but would throw international competition oversight into disarray and potentially end the three-way battle between global alliances.

The pair would have about 27% of the domestic U.S. market by traffic, or less as AMR shrinks. That market share may be palatable, with concessions, for U.S. regulators who are fresh off their successful effort to crush AT&T’s takeover of T-Mobile USA.

But if a Delta-AMR deal came to pass, Delta would fold AMR into its SkyTeam grouping, effectively killing the Oneworld alliance that American leads with British Airways.

Regulators granted antitrust immunity on transatlantic services to members of the three global alliances–Star is the third. Cutting the number to two would likely force a rethink.

Shares of Delta are 2.8% higher as our Deal Journal colleagues report the carrier is considering a bid for AMR. Shares of bankrupt AMR are about 14% higher. Neither Delta nor AMR are commenting on The Journal story.

[Wilfrid]

That AA.

[Sneakeater]

The other one will never go bankrupt.