The Constitution was made to guard the people against the dangers of good intentions." --American Statesman Daniel Webster (1782-1852)

Wednesday, November 30, 2011

American Airlines files bankruptcy

How Does the American Airlines Bankruptcy Affect You?American Airlines, which filed for bankruptcy on Tuesday, is among the last of the major carriers to do so, raising predictable questions for customers about how the changes will affect them. Based on what can be gleaned from the bankruptcies of other airlines over the past few years, the general answer is that at least for the short term, the experience of flying with American will remain largely the same, though changes are likely down the road.Here are answers to more specific questions about miles, future flights and services.What Happens to My Frequent Flier Miles? Airlines can revise the rules of their loyalty programs without notice, though American says it plans no changes. On Nov. 29 the company notified AAdvantage members in an e-mail that miles “you’ve earned are yours and will stay yours, subject to the usual policies, until you choose to redeem.” The message went on, “your elite qualifying miles and your elite status, including lifetime status granted under the Million Miler program, is secure and remains intact.” Travelers on American will also continue to earn miles through partnerships including Citi AAdvantage credit cards as before.Still, all this could change. “If American’s problems prove insurmountable and it is forced into Chapter 7 liquidation, the AAdvantage program would almost certainly be sold to another major airline,” the frequent flier expert Tim Winship wrote in a blog post, “Where Do My Miles Go if American Goes Bankrupt?” on SmarterTravel.com in October. If that happened, he said, “members would find themselves and their miles transferred to another program.” When Eastern Air Lines liquidated in 1991, he pointed out, its miles were honored in Continental Airlines’ program. In that same year, he added, when Pan Am went under, WorldPass members and their miles were folded into Delta’s program.Analysts say there is no indication at this point that American is headed in that direction.What About Future Flights?Customers considering purchasing a ticket on American for later this year or next shouldn’t worry that the airline won’t be there. AMR Corp., the parent company of American Airlines and American Eagle, filed for Chapter 11 bankruptcy protection, which allows companies to keep operating while they reorganize. American says it is honoring all tickets and reservations as usual and will make normal refunds and exchanges. “We will continue to operate our regular schedule of flights, and there are no immediate changes to our service or schedules as a result of the Chapter 11 filing,” the company stated in a list of answers on its Web site to frequently asked questions about flights and tickets. Go to aa.com/restructuring and click on the links under “information for customers” for more information.Keep in mind that most major airlines have sought bankruptcy protection over the last few years and have remained in business. “Airlines do a better job at filing bankruptcy than delivering luggage,” said Henry H. Harteveldt, a travel industry analyst and co-founder of Atmosphere Research Group, based in San Francisco. “Continental has gone through it twice. Delta, Northwest, US Airways, America West. Except for Southwest, there isn’t a single airline that started before deregulation in 1978 that has not gone through bankruptcy.”Will There Be Service Cuts?Probably. In the past, airlines have used bankruptcy as a way to cut service to some cities — a move analysts say travelers should watch out for next year. “Airlines generally use bankruptcy as a way to exit unprofitable routes, unprofitable cities and terminal leases on unprofitable aircraft,” Mr. Harteveldt said. “So while it’s too soon to tell and speculation is useless, people who are traveling at least six months or more away from now will definitely want to check their reservations as time gets closer.”The airline might also consider teaming up with other airlines through code-share agreements to take on certain routes they can’t provide on their own. “That may mean a change in seat assignments as airplanes would be different,” Mr. Harteveldt said. Upgrades for frequent fliers booked on such flights could also be affected. But any possible changes are still many months away, as the company navigates through bankruptcy.

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