AMR, American Airlines are filing for Chapter 11 bankruptcy; Arpey is resigning - 29 November 2011 (http://www.bloomberg.com/news/2011-11-29/amr-files-for-bankruptcy-protection-in-new-york-as-talks-with-pilots-end.html)

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http://www.youtube.com/watch?v=tWogtk1hB58

Probably long overdue for them. They were the only major legacy carrier to avoid it except for Continental I believe. This was something they needed to do in order to get competitive again.

Queue up take over by Doug Parker and US Airways in 3...2...1...

So some things I'm picking up on the chatter that seems pretty common.

The MD-80 fleet will likely see a large portion of it parked through lease rejections. This could impact OKC directly as service to Dallas is all MD-80 (last I checked). The window could also be opened for more RJs that seat 70+ pax and allow stations like OKC to go all Eagle. We'll have to see though.

Tulsa could get smacked pretty hard to if AA decides to move more of the maintenance down to the Dallas area or outsource it completely.

Overall many feel this is just setting up the expected takeover by US Airways. They attempted to get both Delta and United when they were in bankruptcy. Now that they are both married off (to Northwest and Continental respectfully) it is likely that American is the main target as Parker wants to run a large airline. US Airways still has their former CEO (before the America West merger) Lakefield as Co-Chairman of the Board. He was the money man brought in to finance their second bankruptcy and also the merger. Expect him to be getting the investors lined up again for this. The two airlines will fit together pretty well when it comes to the network. US traded most of their LGA slots to Delta for more DCA slots. So the large station there by AA will integrate nicely. The PHX hub could get the ax for LAX. All other hubs...DFW, ORD, CLT, MIA, and PHL will work pretty well together. It would get US back into a very strong position in the Northeast like the old days with hubs at JFK/LGA, PHL, and DCA. Of course the merged company would retain the American Airlines name, but would be ran by the US Airways crew. Not sure that is really a good thing though. LOL Shareholders will love it, but passengers may not.

That would be interesting if USAir merged with American. There would then only be 4 major carriers: American, Delta, United and Southwest. I think you're right that Phoenix would be downsized and hubs would be in LA, DFW, Chicago, Miami, DC and NYC with smaller hubs in Phoenix, Charlotte and Philadelphia. American would dominate the east coast and have a significant presence at 3 of the largest airports at LA, DFW and ORD.

I doubt the Tulsa base is impacted much in the short and long term. Their facilities are so extensive there and would be difficult and expensive to duplicate elsewhere even in DFW. Some divisions could consolidate and already have but the bulk would remain in Tulsa and would likely be expanded if the airlines merge into a larger entity in the future.

AMR should've done this several years ago...

It's sort of ironic to see USAir in the position it is now. The airline should have been dead since the 80s, but always found a way to keep living. However the brand will finally be put to rest if they do buy American since that brand has better international recognition.

I think we've been on the road to have only 3-4 major airlines in this country. Ideally this will spur growth of new startups that we haven't see in 15 years. Of course in in the short term it means less low fare competition. Right now we are down to Allegiant, Frontier, JetBlue, and...umm...well there is the Direct Air scheduled charter outfit back east. About a dozen AirTran cities are getting axed by Southwest, so that merger isn't doing them any good.

I wouldn't see PHL or CLT getting all that small from a hub perspective. LGA and JFK can get a premium thanks to mostly O&D traffic. They can push a lot of the connecting traffic through PHL and still keep it pretty sizable. CLT would give them a strong SE hub again that MIA won't be able to duplicate. MIA is great as a gateway to Central and South America and the Caribbean but not much else for people that just want to fly to other areas in the Southeast.

As far as expanding Tulsa, it really depends. If USAir buys them as some expect, Parker has no issue sending work to third parties to do. He has USAir making money pretty well right now and that is buy cutting costs where he can. Outsourcing a good chunk of the maintenance work will assist with that.

AMR was definitely not the smartest in waiting this long. Their competitors are stronger. Though the purchase of TWA screwed them up pretty good, but the remnants of TWA are almost completely gone now. Although you have to give them credit for going into this being in the position of having $4.2 Billion in cash and able to finance their own reorganization instead of going outside to get DIP financing that would put them at a bigger risk for take over. Though in a corner office out in Tempe, Doug Parker is still thinking and plotting I feel.

American needs to cut costs in order to become more competitive and most their expense is in people.

Tulsa should be worried... I could see them out-sourcing a big chunk of their operations or at the very least slashing wages and benefits and reducing staff as much as possible.

From a recent article:


American has an extremely heavy payroll load, essentially. It keeps more than 22 maintenance employees per plane, for instance; compare that to Delta's 12 or JetBlue's 3.4 or Northwest's .8. (Eek, .8?) And American's maintenance is significantly less outsourced than other airlines. American actually employs nearly 15,000 maintenance people; JetBlue employs 471.

American needs to cut costs in order to become more competitive and most their expense is in people.

Tulsa should be worried... I could see them out-sourcing a big chunk of their operations or at the very least slashing wages and benefits and reducing staff as much as possible.

From a recent article:

There will be cuts at Tulsa, but I don't think they will be as deep as feared. The base up there does maintenence for other air carriers, both commercial and cargo. That will probably provide a hedge for any huge layoffs.

If any area should be worried it should be DFW.

Speaking of possible mergers, there is a decent probability that Frontier could merge with jetBlue or possibly Spirit. Southwest could be in the mix too but has said they are no longer interested as they are already #2 at DEN. Remember they failed to merge with Frontier a couple years ago when Republic won out..now Republic is trying to rid itself of Frontier. I think a combined Frontier/jetBlue would be great and would introduce jetBlue to the OKC market with a non-stop to Denver (unless they downsize the Denver hub).

A JetBlue/F9 hook up would be good for a lot of people. It would keep low fare competition in place and not eliminate a competitor - like Southwest would have done (and is doing again to AirTran). Their products really aren't too far apart either so some of the novelty will remain as well.

A JetBlue/F9 hook up would be good for a lot of people. It would keep low fare competition in place and not eliminate a competitor - like Southwest would have done (and is doing again to AirTran). Their products really aren't too far apart either so some of the novelty will remain as well.

You think they would keep the Denver hub? Frontier has been having a hard time with 3 airlines having large operations there. It's one of United's largest hubs and becoming one of the bigger airports for Southwest. jetBlue already has hubs in NYC and Long Beach, and may add Austin as a focus city or hub in the future. Would there be a need to keep Denver as a hub when the competition is already so stiff there?

You think they would keep the Denver hub? Frontier has been having a hard time with 3 airlines having large operations there. It's one of United's largest hubs and becoming one of the bigger airports for Southwest. jetBlue already has hubs in NYC and Long Beach, and may add Austin as a focus city or hub in the future. Would there be a need to keep Denver as a hub when the competition is already so stiff there?

I think the main reason they would keep Denver as a hub is because it is still profitable for them, plus they have a legacy here. Until Republic bought them, they had virtually no flights that went anywhere but either to, or from Denver. It is still that way for the most part.

You think they would keep the Denver hub? Frontier has been having a hard time with 3 airlines having large operations there. It's one of United's largest hubs and becoming one of the bigger airports for Southwest. jetBlue already has hubs in NYC and Long Beach, and may add Austin as a focus city or hub in the future. Would there be a need to keep Denver as a hub when the competition is already so stiff there?

Of course they would keep Denver. What would be the point of taking on F9 without it? Yes there are 3 large operations there, especially thanks to Southwest dumping capacity to try to destroy Frontier. Unfortunately, United seems to be taking the biggest hit. I believe they are getting ready to dump around 60 or more nonstop flights out of there now. Frontier is staying mostly stable. United doesn't need Denver that much anymore. They have Houston which is much larger.

For JetBlue...I wouldn't consider Long Beach a hub, it is still a focus city though they have a good number of markets served. They only carry around 2 million pax a year, which is much less than the 9+ million out of JFK, 6 mil from Boston, and 4 mil from Orlando. FLL is also bigger with 3 million. Haven't heard anything about AUS becoming a focus city, but it isn't one of their larger markets.

With Frontier overall it was a shock that Republic bought them in the beginning. I think they were simply trying to find a way to secure flying for the EJet fleet that was threatened with Midwest going under (who they also bought). Republic really hasn't shown any interest in operating Frontier long term. It was mostly a short term investment to get F9 stable and then prepare to spin them off. We are in that part now where they are ready to spin them off or sell them to another company.

AMR was definitely not the smartest in waiting this long.

That short sentence is an illustration of almost everything that is wrong with American business today. You are saying that American was stupid for trying to do the honorable thing and pay it's debts and obligations rather than use the banruptcy laws to avoid paying vendors and employees.

Of course they would keep Denver. What would be the point of taking on F9 without it? Yes there are 3 large operations there, especially thanks to Southwest dumping capacity to try to destroy Frontier. Unfortunately, United seems to be taking the biggest hit. I believe they are getting ready to dump around 60 or more nonstop flights out of there now. Frontier is staying mostly stable. United doesn't need Denver that much anymore. They have Houston which is much larger.

That is true...I guess I didn't think United would abandon Denver after so many years there but the Continental merger changed things and they already have Chicago and Houston in the central region to go with San Francisco/Los Angeles on the west coast and Washington Dulles/Newark on the east coast. United has never had a large international presence in Denver either and the vast majority of their regional and national flights are already duplicated on Frontier and Southwest. jetBlue could have two major hubs in Denver and NYC with focus cities in Boston (east coast), Long Beach (west coast), Orlando (where Delta/Northwest has downsized operations) and possibly Austin in the future if rumors are true.

That short sentence is an illustration of almost everything that is wrong with American business today. You are saying that American was stupid for trying to do the honorable thing and pay it's debts and obligations rather than use the banruptcy laws to avoid paying vendors and employees.

Not saying it is the right thing to do, but when all the competition has gone the route to lower costs to be more aggressive, it put AMR at a disadvantage. Yes it was noble for them to try to hold out, but they were put in a bad position. However now they have the ability to dump costs and get competitive.