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Chapter 11 Bankruptcy For American Airlines

11/29/2011 11:21 AM ET

Chapter 11 Bankruptcy - Here’s more on the news of American Airline filing for Chapter 11 and what the bankruptcy protection means for travelers.

A company reorganization can be painful and disruptive for airline creditors, employees, retirees, suppliers, shareholders and even competitors, but the impact on passengers is far less: planes keep flying, frequent flier miles are still good, reservations are still honored.

The Chapter 11 bankruptcy protection filing by American Airlines and its parent, AMR Corp., will likely not have much direct impact on travelers. American will no doubt get smaller, and so reducing flight schedules will have long-term impact. In the short term, there might even be a “bankruptcy sale” to entice flyers to keep buying tickets on American.

Battles with labor unions will become more intense, with workers forced into contracts they didn’t want to agree to. That may affect the service that travelers get when flying American.

Long-term, American is likely to emerge from bankruptcy with lower costs, just as Delta Air Lines and United Airlines did. Read more here.

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