American Airlines Bankruptcy – What Will it Mean to Us?

It’s all over the news – American Airlines is entering Chapter 11 bankruptcy.  I’m sure many of you are wondering what it will mean to you.  In the short term, it probably isn’t going to mean much.  Your miles should not be affected.  If you have transportation vouchers, they should also be safe, but I personally wouldn’t take the chance with them.  (I obviously followed this advice when I used mine to book our trip to Disney.)  Besides they are only good for 1 year after issuance, so why not look into booking the trip now?  Here are some changes I do expect:

  • American will look for concessions from their employees.
  • The employees will likely try to fight it and argue that the executives make too much.
  • Flights on less profitable routes will be cut.
  • Another airline (possible USAirways) will merge with them.
  • In the short term, American may cut prices to entice people to continue to fly with them during this time of uncertainty.

I highly doubt that American Airlines will go under, but stranger things have happened.  This is all about American Airlines getting control of their operating costs.  They are the last of the legacy carriers to go through bankruptcy.  This will give them an opportunity to get their operating costs down.

Personally, I wouldn’t increase my holdings in American AAdvantage miles.  If you’re booking a trip in the near future, consider using your AAvantage miles before say United or Delta.  But I certainly wouldn’t panic.

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