Kip Tips


What American Airlines' Bankruptcy Means for Travelers

Cameron Huddleston

Don't panic if you have a flight scheduled on this major carrier.



American Airlines is operating as usual even though its parent company, AMR Corp., filed for bankruptcy today. There will be no immediate changes to its flight schedule or service, according to a statement from the airline.

AMR says it filed for Chapter 11 reorganization to reduce costs and debt so it can be more competitive. Throughout the bankruptcy process, it plans to honor tickets and make refunds as usual. The airline also will maintain its AAdvantage frequent-flyer program and says members won't lose any miles that they have earned.

In fact, American Airlines might "attempt to lure reluctant consumers by offering bonus frequent flyer miles and perhaps a fare sale," wrote Airfarewatchdog.com founder George Hobica on his blog. Anne Banas, executive editor of SmarterTravel.com, agrees that the airline might offer bonus miles to keep its loyal customers happy.

AMR is one of the last of the major airline companies to file for bankruptcy (Southwest has not filed for bankruptcy). UAL Corp., the parent of United Airlines, emerged from a three-year bankruptcy in 2006. Delta Air Lines filed for bankruptcy in 2005 and emerged in 2007 after a 19½-month reorganization.

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Banas says that it was business as usual for both of these airlines during their bankruptcies. So American Airlines passengers should feel confident that the airline will continue to operate without disruptions. However, she does recommend that anyone who has booked travel on American sign up for alerts from the airline so they can be informed if there are any changes to their flights.

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