American Airlines bankruptcy turnaround hits turbulence
DALLAS (AP) -- Just weeks ago, American Airlines was working its way through bankruptcy court, on schedule for one of the fastest turnarounds in aviation history. Planes were full. Revenue was pouring in. Then seemingly overnight, American became the butt of jokes from Facebook to late-night TV.
A slowdown that American blamed on pilots caused massive delays and cancellations. Then rows of seats came loose on a few planes. Passengers wondered if they’d get where they were going on time -- and in one piece.
"American Airlines has a new slogan," Jay Leno joked on NBC’s "The Tonight Show." "Your seat is free to move about the cabin."
Some travel experts advised booking on other airlines to avoid getting stranded on American. Low-cost rival Spirit Airlines picked on American with this ad: "We let low fares loose, not seats."
American’s on-time record fell well below its competitors, and its cancellations were the highest of any airline. There are signs that the trouble -- which began in September when Amer ican threw out the union contract of its pilots -- is causing passengers to switch. Domestic traffic fell by 7.1 percent in September from the same month a year earlier. No other major airline experienced a drop like that.
Thomas W. Horton, CEO of American and parent AMR Corp., acknowledges that a few weeks in September were "very difficult on our customers." American has said little else to ease customers’ concerns.
Horton and other executives instead steer conversations toward the airline’s recent financial performance, which by many measures has led the industry. For six straight months, American -- the nation’s third-largest airline -- has reported larger gains in a key revenue-per-mile statistic than rivals United Airlines, Delta Air Lines, Southwest Airlines and US Airways. But its profit margin continues to lag.
AMR, which filed for Chapter 11 in late November, could still emerge from bankruptcy protection early in 2013. That would mark a quicker turnaround than the 38 months it took United and the 19 months for Delta.
Such speed would impress the bankruptcy court, creditors and potential investors, but it wouldn’t boost Jason Case’s confidence in the beleaguered airline.
"I haven’t scheduled any of my upcoming flights on American because of the uncertainty," says Case, who owns a consulting business in Brookhaven, Miss., and usually flies twice a week on either American or Southwest. He says he booked on Delta and Southwest instead.
American has offered passengers a refund if their flight is delayed more than two hours and they choose not to fly. They also can switch to another American flight at no charge or fly on another airline, if seats are available.
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