- American Airlines files for bankruptcy; says it will operate normal flight schedules
- CNN airline and aviation correspondent: Move is intended to bring down costs
- Quest: I think many travelers are used to this
- Quest: American's employees can expect to see significant changes in their benefits
Speculation about the future of American Airlines has been swirling for months. Still, many travelers were stunned Tuesday to learn that the carrier and its parent company have filed for Chapter 11 bankruptcy.
American, American Eagle and all other subsidiaries will honor all tickets and reservations and operate normal flight schedules during the bankruptcy filing process.
CNN airline and aviation correspondent Richard Quest weighed in on some of the basic questions about the airline's decision.
Why has American Airlines decided to make this move?
Richard Quest: They're doing it for one simple reason: The American Airlines cost base is considerably higher than United, Continental, and Delta, which merged with Northwest. Those other airlines did go through Chapter 11 during (past) recessions and they managed to slash their costs.
So now American has been struggling for the last few years trying to negotiate, trying to get agreements, trying to get its costs down.
But frankly, with oil prices high, with growth slowing down, and with so many other competitive disadvantages, incoming CEO Thomas Horton told me a short while ago they really had no choice. It was time to push the nuclear button.
There's no doubt it is a dramatic development for a company that has several billions of dollars in cash. It has good strong hubs.
All in all, this is being done purely and simply not because American is going bankrupt -- the planes are still flying, the champagne is still being served in first class, all things will be normal -- it's being done to get down the costs.
If I have a ticket now or for six months from now, should I be worried?
Quest: There is no danger that American Airlines is going to stop flying. Let's be absolutely crystal clear about that.
For the traveling public, this has absolutely no effect.
I think many travelers are used to this. They flew United in Chapter 11, they flew Delta, US Airways and all the others in Chapter 11 during those times.
Horton told me he hopes the Chapter 11 will last less time than the others, the average being 16 months.
Are any changes coming to the airline?
Quest: The people who I think perhaps will be watching and be concerned are American's employees. No changes immediately, but longer term, they can expect to see some significant changes in their benefits and in their conditions of employment.