American Airlines bankruptcy unlikely to disrupt fliers

— -- Industry experts and the head of American Airlines agreed Tuesday that the airline's filing for bankruptcy protection should have little impact on flyers — for now.

AMR Corp., the parent to American and American Eagle, filed for Chapter 11 reorganization in federal bankruptcy court in New York to restructure the company's debt and costs. The airlines, which had a combined 9 million passengers in October, said flight schedules and reservations would operate as usual.

"This is a difficult decision, but it is the necessary and right path for us to take — and take now — to become a more efficient, financially stronger and competitive airline," said Thomas Horton, the new chief executive of AMR, which employs 88,000 people. "Near term it will be business as usual. This is a well worn path in the industry so I think most customers understand that."

Delta, United, Continental and US Airways all have gone through Chapter 11 reorganizations. American has about $4.1 billion in cash on hand to pay for goods and services while the company goes through the process.

American and American Eagle assured customers they would:

•Fly normal schedules with 3,300 daily flights.

•Honor tickets and reservations.

•Fully maintain the AAdvantage program for its 67 million frequent flyers, with miles remaining intact.

•Continue Admirals Club amenities for eligible customers.

•Provide employee wages and health benefits without interruption.

AMR reported losing $471 million on about $22 billion in revenue in 2010, after losing nearly $1.5 billion the year before and $2.1 billion in 2008.

As expectations for an American bankruptcy grew, investors fled. The price of AMR shares declined from $7.92 at the start of the year to $1.61 on Nov. 23. Coinciding with the reorganization, Gerard Arpey retired as chief executive of the company. Horton has worked at the company for 22 years.

"Throughout the restructuring process, as always, our customers remain our top priority and they can continue to depend on us for the safe, reliable travel and high quality service they know and expect from us," Horton said.

Andrew Thomas, assistant professor of international business at the University of Akron and author of Soft Landing: Airline Industry Strategy, Service, and Safety, agreed with Horton that customers should see few changes in the short term. The real changes, he said, will occur when American begins to emerge from bankruptcy.

"The examples from the other carriers provide insight," he says. "When the lawyers, judges, politicians, and lobbyists get done with it, AA will likely be a very different airline, especially regarding markets served — or not served."

Over time, he said he expects the quality of service on American to deteriorate as older, higher-paid employees are replaced with lower-paid workers "whose levels of service and quality are often inferior."

Thomas said he also expects a further unbundling of services.

"AA will now fully go the way of the other major carriers, where the 'flying cheap' strategy is in full force," he said.

Seth Kaplan, managing partner at Airline Weekly, a publication that covers the industry, said he expects that flights from hubs in Dallas and Miami will be safe, but that low-cost competitors in Los Angeles and dominant United in Chicago could convince American to reduce its presence in those cities.