American Airlines Reports Losses Related to Bankruptcy

by San Antonio Attorney

The attempts of American Airlines to exit bankruptcy prompted it to report another unprofitable quarter on Wednesday.

AMR Corporation, the parent company of American Airlines, reported $238 million of net loss in the third quarter. Last year, it suffered a net loss of $162 million during the last quarter prior to its bankruptcy filing in November 2011.

The airline blames several charges pertaining to the bankruptcy, which includes severance payments amounting to $211 million.

American Air is offering voluntary buyout to some of its unionized workers, such as flight attendants and ground workers. This is part of the agreement with those unions. On Wednesday, the airline revealed that since 2,200 flight attendants have taken the buyout offer worth $40,000, it will have to start hiring 1,500 new flight attendants next month. American Air was able to reach a new labor agreement with the union of pilots.

After the bankruptcy court granted the airline’s request to drop the contracts of pilots, they started calling in sick and submitting maintenance reports on trivial things, according to the airline management. Cancellations of flights increased, and the on-time performance of the airline dropped below 50%.

American Air said those setbacks did not make a substantial strike to the company’s earnings, although the number of airline passengers declined by 4% last month.

The pilots and the management have returned to the negotiating table to make a new deal. This month, the on-time performance of American Air reached 65%, based on FlightStats reports. However, it is still below the industry’s average performance of 79%.

The airline unions want a merger with US Airways Group.  All of them have already reached a tentative agreement with the US Airways, which could be used by US Airways to argue to the creditors of American Air that a merger will make its labor satisfied and bring back its business operations’ full capacity.

American Air management has stated it would rather exit bankruptcy as an independent company.

–  The outcomes of a bankruptcy case depends on the type of bankruptcy filed and the financial situation of the debtor. If you want to have an idea of what your life or business look like when you exit a Chapter 7  bankruptcy, an experienced San Antonio Chapter 7 Attorney can tell you.

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