American Airlines bankruptcy - a Q for economists
Mar 31st, 2003, 06:14 AM
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American Airlines bankruptcy - a Q for economists
If American Airlines declares itself bankrupt, which I read is a possibility, what will the consequences be?
Will they cease trading?
Will they cease trading?
Mar 31st, 2003, 06:35 AM
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Hi Steve, as I understand it they're talking about Chapter 11 bankruptcy, which is roughly the equivalent of receivership or administration; ie they'll try to trade through whilst holding off their creditors.
Mar 31st, 2003, 06:52 AM
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Chances are very high that they will keep flying while in bankruptcy.
While their assets have been reduced, as I doubt that aircraft are holding their value as they once did, their real problem will be cash flow oriented.
The bankrupcty judge will allow them protection from their creditors while they come up with an acceptable plan.
The plan will most likely be completed in cooperation with banks and lendors and you can bet the person that is going to get screwed is the common stock holder!
US
While their assets have been reduced, as I doubt that aircraft are holding their value as they once did, their real problem will be cash flow oriented.
The bankrupcty judge will allow them protection from their creditors while they come up with an acceptable plan.
The plan will most likely be completed in cooperation with banks and lendors and you can bet the person that is going to get screwed is the common stock holder!
US
Mar 31st, 2003, 07:28 AM
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So, let's say they do cancel some flights. And, they cancel one I'm supposed to be on and "re-accommodate" me on some other flight/airline that is not acceptable to my time frame. What rights do I have to get my money back?
I'll be very specific--I bought tickets via Expedia on an AA flight to France in July. It was one of those "Web fares" on expedia, where they don't tell you your departure times, etc. They are very explicit about the fact that you can't change/can't get FF miles, etc. Fine. According to Expedia--if the airline liquidates or cancels the flight--it is up to them if they want to give us our money back. Whatever. I'm not *real* concerned about them canceling the flight/etc. and a lot can happen between now and July. Just wondering if anyone else has had tickets where the flight was canceled or airline went "under"--what happened with the refund?
I'm not a very experienced airline traveler (obviously) and am not wise in the ways of airlines, so if this question is silly, feel free to let me know.
I'll be very specific--I bought tickets via Expedia on an AA flight to France in July. It was one of those "Web fares" on expedia, where they don't tell you your departure times, etc. They are very explicit about the fact that you can't change/can't get FF miles, etc. Fine. According to Expedia--if the airline liquidates or cancels the flight--it is up to them if they want to give us our money back. Whatever. I'm not *real* concerned about them canceling the flight/etc. and a lot can happen between now and July. Just wondering if anyone else has had tickets where the flight was canceled or airline went "under"--what happened with the refund?
I'm not a very experienced airline traveler (obviously) and am not wise in the ways of airlines, so if this question is silly, feel free to let me know.
Mar 31st, 2003, 07:52 AM
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lovelinus,
This is a great question. The one sure answer is if AA liquidated(chapter 7). In that case, other airlines will try to accomadate you if you're already in the middle of your trip, I believe there is a $25.00 charge for that. The only small problem is that only US based airlines are required to do that by law, so if you're in the middle of nowhere, you have to get back on your own to the closest airport served by a US airline.
Since this is what I would call a "priceline" kind of a ticket, I would say that Expedia responsibility is more then what they told you. I could tell you that if you bought a 'regular' ticket, the airline would have to refund your money if the changes are not acceptable to you, but again, I'm not sure about your ticket.
The best part of my answer is this, AA will be flying in July, unless some catastrophic terrorist attack happens, when our whole economy goes down the toilet. In that case, getting few hundred back will probably be the least of your worries. I could also suggest that you call AA, and talk to them directly about your concerns. They do have the special exemptions now due to war concerns, so you could possibly change and/or return your ticket now for no charge, but again, not sure if it will work for your class ticket. I always tell people that buying one of these, pretty much commits you to the trip, and your chances of getting your money back is slim to none. Another way of looking at it, is that you are at the bottom of the receiving line, if there were some refunds coming back. Personally I would never buy one of these, just to save few bucks.
Good Luck!
This is a great question. The one sure answer is if AA liquidated(chapter 7). In that case, other airlines will try to accomadate you if you're already in the middle of your trip, I believe there is a $25.00 charge for that. The only small problem is that only US based airlines are required to do that by law, so if you're in the middle of nowhere, you have to get back on your own to the closest airport served by a US airline.
Since this is what I would call a "priceline" kind of a ticket, I would say that Expedia responsibility is more then what they told you. I could tell you that if you bought a 'regular' ticket, the airline would have to refund your money if the changes are not acceptable to you, but again, I'm not sure about your ticket.
The best part of my answer is this, AA will be flying in July, unless some catastrophic terrorist attack happens, when our whole economy goes down the toilet. In that case, getting few hundred back will probably be the least of your worries. I could also suggest that you call AA, and talk to them directly about your concerns. They do have the special exemptions now due to war concerns, so you could possibly change and/or return your ticket now for no charge, but again, not sure if it will work for your class ticket. I always tell people that buying one of these, pretty much commits you to the trip, and your chances of getting your money back is slim to none. Another way of looking at it, is that you are at the bottom of the receiving line, if there were some refunds coming back. Personally I would never buy one of these, just to save few bucks.
Good Luck!
Mar 31st, 2003, 08:59 AM
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I cashed in ff miles for two tickets to Italy (on AA) in late May and also paid (too much) for a ticket for my son so that I could be sure he would be on the same flight with us. I wrote directly to AA when all the stories began coming out about their going into bankruptcy. The answers I received were vague and predictable, so don't expect to get much information from them about the "what if's." I would like to read other comments about what experiences anyone might have had in similar situations. Uncle Sam and AA Frequent flyer, I sure hope you are right. PJK
Mar 31st, 2003, 09:12 AM
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Thanks, AAFrequentFlyer. I believe AA will be flying in july, barring something MAJOR, too. Your idea to call AA to ask is a good one. I will do that if I get overly concerned. When talking to Expedia, one customer service rep did say that if the times were changed and not acceptable to me then I could get a refund. Another rep told me that it would be up to the airlines. I'm hoping I won't need to know the answer to my questions... and my question is really based on too many hypotheticals happening---ones that customer service reps may not be equipped to ask.
Again--thanks for the response. It was helpful to hear someone else feels the same way as I do about AA flying in July...
Again--thanks for the response. It was helpful to hear someone else feels the same way as I do about AA flying in July...
