American Airlines Chapter 11 Bankruptcy
American Airlines passengers should not expect any near-term changes, but the bankruptcy filing may affect their future plans.
The Chapter 11 reorganization of American Airlines and its parent company AMR Corp could lead to a shakeup in prices, fewer flights and an altered flying experience.
American sent a letter on Tuesday to its frequent flyers saying, "We want to assure you that your AAdvantage miles are secure," and noting its intent to honor existing program awards.
Airlines tend to protect their mileage programs throughout bankruptcy, he said, because they make money selling miles to credit card issuers, and even passengers trading in miles fill seats and spend money.
American may cut prices to keep planes full and nervous passengers buying tickets for a slow January and February, but those are typical sale periods for the airlines.
"As always we will remain competitive with fares in the marketplace," said Tim Smith, an American spokesman. Parsons said he expects American to price aggressively over the winter, perhaps adding extra miles rewards and the like, to keep up customer confidence.
But the longer-term impact of an airline bankruptcy is higher ticket prices, not lower ones. As American uses this reorganization to get rid of many big, pricey, old planes, it may cut their routes. "With fewer planes in the sky and fewer seats, you may be forced to pay more," said Parsons.
Once American emerges from bankruptcy, it will be less likely to price aggressively, said Morningstar's Alukos. "Future ticket prices should be higher."
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