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Yes, American Finally Entered Bankruptcy

Not much time to write but I would be remiss if I didn’t mention American’s bankruptcy filing. Key points:

– They didn’t wait til the last minute where they were running out of cash, so this is not a panic move. It was pretty much their only option at this point.

– Everything will continue as normal (ie, your Aadvantage miles will be just fine).

– It isn’t quite so obvious where they’re going to cut routes (which will inevitably happen). They don’t really have an obviously weak hub like Northwest does/did at Memphis; Delta does/did at Cincinnati; and US Airways did at Pittsburgh. American eliminated St Louis when they merged with TWA, and around the same time shrunk operations at Nashville and Raleigh. Maybe Los Angeles shrinks. Maybe it’s not worth fighting with a much stronger United at Chicago. Maybe they give up some of San Juan as JetBlue has started staking a claim there.

– Employees will be most affected. There will be layoffs and new employees will be hired at lower salaries.

– US Airways may be salivating right now. Their stock is up 14%, possibly on the idea that they would be able to scoop up (or in some way merge with) a weakened American. That sound a bit crazy when I write it, but it’s really not. In fact, when you think about it, a US Airways/American/Alaska link-up would be a formidable competitor, assuming the British Airways/Iberia/JAL thing really grows the way they expect.

But don’t worry – your flight won’t be canceled and your Aadvantage miles are fine. No need to start spending them now (unless you want to, of course).

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