No, American Airlines Will Not Declare Bankruptcy …

Folks, I find the idea that American Airlines is at risk of declaring Chapter 11 bankruptcy to be fanciful delusion. I don’t see it happening nor do I find such speculation helpful.

Bankruptcy At American Airlines? Highly Doubtful.

At a base level, there is an inherent risk of bankruptcy at any business. Just like there is a risk that I will be struck by lightning or hit by a motorcycle or die from a lethal mix of monkeypox and coronavirus.

I’m not trying be facetious. Certainly, I can point to warning signs at American Airlines. Indeed, there is debt. Yes, interest rates are rising and a recession looms. True, labor relations are tense and new contracts are under negotiation, with both sides far apart.

But I can also make a case for bankruptcy (albeit a different one) for United, Spirit, Alaska, and JetBlue.

The bottom line is that I see no signs to suggest that American Airlines is actually considering the “nuclear option” and don’t find it helpful to speculate about it until we cross that path (until AA cannot service its debt or a strike is initiated or demand falls through the floor once again).

Millions of people read this blog and others on the Boarding Area network. I don’t want to flatter myself over the reach of Live and Let’s Fly, but I also don’t want to drive people from booking travel on American Airlines over fear of bankruptcy. Many people fail to understand that declaring Chapter 11 bankruptcy does not mean liquidation, but restructuring debt. Even so, I don’t even think Chapter 11 will be necessary unless strong headwinds hit the entire industry.

(And if that happens, Uncle Sam is always ready to bail out US airlines)

Thus, I would still book travel on American Airlines if the schedule and price makes sense. American Airlines has ZERO risk of going under and I’d rate the probability of bankruptcy of any chapter at this point at similar levels.

Then again, I was wrong beforeā€¦ let me pepper this piece with a bit of humility and a personal note.

I remember the day American Airlines filed for bankruptcy in 2011. Why? Because I panicked, sold all my AA stock at pennies on the dollar, lost thousands of dollars, and then watched as the stock was not canceled and rose steadily as the airline emerged from bankruptcy.

Don’t panic folks. Whatever happens, American Airlines will still be with us, will still fly, will still have AAdvantage, and will still be a source of debate.


> Read More: American Airlines Headed for Bankruptcy? (A piece I wrote in 2011 two months before AA declared bankruptcy)
> Read More: What American Airlines’ Bankruptcy Filing Means for You (Another piece I wrote in 2011 just after the bankruptcy filing)


CONCLUSION

Talk of bankruptcy is premature and counterproductive. Let’s stick to operational reliability, current labor negotiations, and trying to convince AA not to decimate the AAdvantage program. Maybe I’ve learned nothing over the decade, but this just does not strike me as a 2011-like situation.

image: American Airlines

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