Why American Airlines Filed For Bankruptcy

It’s always the Gerards that end up pissing on airlines. As you’ve probably heard, American Airlines, headed by its Chairman and CEO Gerard Arpey, filed for bankruptcy protection last Tuesday. While other airlines had done this years ago, mainly after the effects 9/11 hindered the aviation industry, American Airlines was one of the only companies to not file a Chapter 11 in order to lower debt caused by high fuel prices and expensive labor contracts. This, paired with the fact that most other airlines merged in order to lower even more costs and become twice as profitable, meant that while American Airlines plummeted, the other guys were able to reduce debt and begin growing once again. And since American Airlines is a business, they had to compete with these lower prices that other airlines were able to offer, reaping them less revenue and even fewer profit. Oh I’m sorry, I forgot to mention the fact that some money was lost when the board decided to give its executives million dollar bonuses every April of every year. But it makes sense right? Because they’re so good at their jobs.

Now, all you faithful Blades readers know that we love airlines and airports and are heartbroken to see this crisis come to fruition, but it was all a result of mismanagement heavily on the part of their CEO. It wasn’t until debt reached $29.6 billion and only $24.7 billion in assets that they decided to take action. You can see from the video of Union President Captain Dave Bates and the PDF files that we’ve acquisitioned through our hook-ups that the pilots and workers of American Airlines have been told little other than “Don’t worry, everything will be OK, business as usual”. Little attention was paid as to the reasons for filing bankruptcy, because all of it was spent preaching that the customers still come first and that all flights, tickets and miles will be honored and that their wages and pensions are safe…for now.

Really, there’s an eerie feeling floating around all of this that while everything is said to be fine, in reality it may be failing. In the PDF labeled “Message from Gerard Arpey”, he says little more than “It’s ok, but I’m leaving you for another job…here’s Thomas Horton, your new CEO”. You may say Horton hears a who, but what he really hears is “Who’s gonna pay my kid’s college tuition! I have medical bills and need coverage for my medication!” Poor Horton was left to pick up the pieces. Despite this, the company is following through with ordering 460 new Boeing and Airbus jets and pay for another 50 that had previously been ordered. Aren’t bankrupt companies not supposed to have money? Even more great management from the millionaire execs at AA. The company may blame “volatile fuel prices” for their misfortunes, but we blame the big guys. They’re the reason stock prices fell to 26 cents, the reason jobs are at risk and the reason futures are unclear. We used to think being in an airport was hell, maybe owning them is the true inferno.

Union president
APA President Captain Dave Bates

Click preview to see PDFs and letters
Restructuring Resource Center
Message from Gerard Arpey
AMR and American Airlines Court Orders
Message from Chairman and CEO Tom Horton