American’s Bankruptcy Won’t Affect Customers, Analyst Says

Until now, American Airlines had been the only network carrier to stay out of bankruptcy. “That’s American’s problem and American’s pride,” said Michael Boyd, president of Boyd Group International, an airline industry consulting group.

In 2003, American won concessions from its unions that enabled it to stay out of bankruptcy. But ultimately, pension costs -- the airline had to write a check for $300 million to fund its pension plan last year -- and the high cost of oil forced American to concede to the inevitable.

However, by holding off on declaring bankruptcy, American was able to encourage employees to move from the airline’s pension plan to personal 401k plans. In comparison, some airlines just shut down their plans. United Airlines employees got a double whammy, losing both their pensions and, thanks to an earlier employee buyout, the value of their United stock, according to Boyd. Other airlines did grandfather in pension plans.

American’s bankruptcy won’t affect consumers, the AAdvantage plan or preferred supplier agreements with major companies, travel management companies or travel agencies, according to Boyd. It’s all about back-room accounting and debt restructuring, Boyd said, and none of that should affect American’s customers.