Several pairs of wings are circling over American Airlines these days. Some belong to rival airlines, others to opportunistic investors. The biggest of them may belong to a vulture.
It has come to this: The major question facing American Airlines is no longer whether it’s going to survive, but the most likely form of its demise — merger or outright dissolution.
American has lost money eight out of the last ten years, and the losses have been in the hundreds of millions of dollars. It’s in a ton of debt. Longtime American passengers will tell you the quality of the airline’s service and performance has fallen over that same period.
Much of its fleet is made up of older, inefficient airplanes with fuel-guzzling engines. Would you try to run a taxi service in 2012 with a fleet of 1959 Buicks?
Now, American is trying to save itself by cutting employee pay and benefits — and if that doesn’t work, it will cut employees. The airline filed for Chapter 11 bankruptcy protection on the grounds that its labor costs keep the company from turning a profit.
It has frozen employee pensions but would really prefer to drop them altogether. It has stated plans to lay off 13,000 workers, 15 percent of its workforce. There are rumors afloat that American is looking to pull out of some major markets around the United States.
American is gambling that the bankruptcy judge will sympathize, void its labor contracts and force cost-cutting measure on the unions, which he can do — if he feels the unions aren’t bargaining in good faith with American.
On the other hand, he can leave those contracts in place if he feels the airline isn’t playing fair. Which makes it more than a little curious that the airline’s parent company, AMR Corp., has now given the airline labor unions one week to restructure their contracts, threatening to unilaterally void them if they don’t.
That sound like fair bargaining to you?
Anyway you slice it, American Airlines these days is a hot mess.
Even before the Chapter 11 filing, there were whispers that American was a candidate to be bought up by one of its relatively few remaining rivals with enough cash to swing the deal. The two names most often mentioned have been Delta and US Airways.
Another possibility is that American will be bought up by some opportunistic, cash-rich equity company. One such outfit, TPG Capital, has been mentioned more than once.
A merger would likely mean a lot of American pilots, cabin crews, mechanics and baggage handlers would be let go, routes reduced, and planes sent to the Arizona boneyard. The airline’s very identity, one of the most historic, could disappear, as have so many others over the last four decades.
There’s little doubt that American Airlines as we know it today probably will not exist a year from now. There is a very real possibility that American will not exist at all a year from now.
That would sadden me some. I have my own emotional hyperlink to this airline.
The first flight I ever took, from Oakland, CA to New Orleans, was aboard an American Boeing 720B. I was 12 years old, traveling alone for the first time. That was the trip that got me hooked on travel.
I’m hoping that someone can pull a rabbit out of his corporate hat and find a way to keep American, and its workforce, intact. The history of the US airline industry since deregulation — and especially since 9/11 — says that’s not the way to bet.
When you cherish your memories, it’s a little painful to witness the decline and finally the passing of the outfits that helped to create them. That’s why, for all my criticism of American on this blog, I’d be sad to see it go.
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Edited by P.A.Rice
