The parent company for American Airlines, AMR, has filed for Chapter 11 bankruptcy this morning.
The board announced the decision stating that it was in the best interest of the company to go through this reorganization.
During the process, American Airlines services will remain unaffected. Flights will take place as scheduled. Members of American’s Frequent Flyer program, AAdvantage will remain unaffected. As is normal for an airline going through a reorganization, operations will continue as scheduled during this process
Shareholders and Creditors are the parties that stand to be affected the most by this filing. Typically in a structured reorganization Shareholders in the company lose their equity since a company comes out of a reorganization as a new corporation, issuing new shares. Former shareholders are not entitled to any new shares as part of this. Creditors normally enter into agreements with the old company that will attempt to make them whole. In some cases, creditors are issued equity in the new company.
As we’ve seen with previous airline bankruptcies, travelers are generally left unaffected. So if you are an American Airlines Loyalist or member or Aadvantage, I don’t think you have much to worry about, and there’s good chance you’ll have a better airline after they get through this process.
For more information on this breaking story, here are the various news media links you can reference:
