The petition is intended as a move “to try to cut costs and unload massive debt built up by years of high fuel prices and labor struggles” according to The Washington Post.
American Airlines announced that the company president, Thomas W. Morton, will replace Gerard Arpey as CEO. Horton said that the airline would operate normally, honor tickets and take reservations.
In the aftermath of 9/11, every major airline in the US struggle with a deep slump in the industry, and eventually they filed for bankruptcy protection, with the only exception of American Airlines.
Nevertheless, AMR Corp. has continued to lose money as it has failed to reach a deal with the pilots’ union in order to reduce labor costs and soaring fuel prices has sent its costs way higher.
Under its Chapter 11 filing in a New York court, the company listed assets of about USD$24.72 billion, while it has liabilities of USD$29.55 billion. The company said it has USD$4.1 billion in cash! Once again, that’s 4 billion in cash, just after announcing a few months ago the largest aircraft order in history with a USD$38 billion bill for 460 new planes from Airbus and Boeing.
With the bankruptcy protection, companies are allowed to reject contracts, which will result in reducing costs by cutting jobs and even terminate pension plans. So, we have on the one hand $4 billion in cash and 460 new planes, while on the other hand we have hard-working pilots that will lose their jobs and pension plans in danger. Isn’t this exactly the kind of ruthless capitalist behavior that has triggered the Occupy movement all over the United States?
A company with billions in the bank, files for an imaginary bankruptcy in order to fault on its contracts, escape from its union pension plan, and cut hundreds or thousands of jobs, all that while buying for itself more than 400 new planes.
In Mexico there is a similar case taking place right now with one of the major national airlines, Mexicana. The bankruptcy petition of Mexicana had the same goal as that of AA, to reduce costs, with the only difference being that it had to stop operations, as it didn’t have all that money in the bank, and it is still looking for investors.
It is speculated that American Airlines might be forced to merge with US Airways, but after everything is said and done, AA will still be there, operating with a huge reduction of costs and debt (a.k.a. less jobs and pensions), and there will be one more reason for the 99% to be upset.
