Since American Airlines filed for reorganization I don't see how they are allowed to continue buying new jets. I am not up on finance law but I always thought this meant you could not pay the bills you already owe, let alone borrow more. However I am glad they are still flying. Also does anyone know if the merger with USAIRWAYS is still in the works or have the feds pretty much nixed it.

Its kind of ironic, I remember a number of years ago seeing former AA CEO Robert Crandall on Meet the Press complaining about TWA gaining a competitive advantage by remaining in Chapter 11.  Chapter 11 is reorganization and Chapter 7 is bankruptcy liquidation.  In Chapter 11 they can continue to operate while they negotiate new financing arrangements with their creditors.

It's amazing that ANY airline can stay in business- given the tremendous expense of the airplane itself, plus the fuel bills, ATC bills (outside the USA, ATC is NOT free), maintenance costs, crew costs, and on and on.

That said, I can't think of any other business that captures your imagination and human spirit.  We all seek to break the bounds of earth and fly like an eagle.  An AMERICAN eagle!

 

Truth be told, I'm sure they could get pilots to work for free - it's THAT much fun.  What's creepy is thinking of those heavy birds flying through the soup - and what else might be in the cloud bank with them.  I have shied away from private aircraft mainly because of the heavy fog banks that come and go around KSFO.

 

Although I can't think of too many places that are prettier from the air!

Chapter 11 bankruptcy is considered a tool by corporate America. How do I know this? Because that is what US Airways' CEO, David Seigel said when US Airways filed bankruptcy the first time in 2003. Continental did it 3 times, America West, United, Delta. The aircraft deals with Boeing and Airbus were cut before American filed for bankruptcy although, you'd have to be pretty naive to think that everyone wasn't aware of what they were planning to do. After almost 35 years in the airline industry nothing surprises me any more. The merger is on hold until US Airways/ American work out a deal on slots in DCA and maybe LGA or until they go to court on November 25th. Stay tuned.

When AMR Corp entered chap11, they were allowed to continue operation as "debtor in possession".  I believe you can get financing (approved by the bankruptcy trustee) while in DIP status, which is separate from any creditor claims that are part of the bankruptcy.  It looks like the judge approved the merger/reorganization plan on Oct 21 so it is moving forward, subject of course to the outcome of an anti-trust case brought by the US DoJ and scheduled to be heard Nov 25.

 

scott s.

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