Bankruptcy Not On The Cards For American Airlines

Bankruptcy is not on the cards for American Airlines. The airline’s CEO, Doug Parker, made the comments earlier today at a conference, confirming that the airline is not even considering filing for Chapter 11 bankruptcy protection.

American Airlines
American Airlines won’t file for Chapter 11 bankruptcy protection. Photo: Getty Images

This year has been one of the most challenging for airlines across the world. Indeed, since the start of the year, we’ve seen multiple airlines file for bankruptcy or similar. These actions have been mainly prompted by the current pandemic that has brought the industry to its knees. However, it also sped up the inevitable for some already struggling airlines.

So, what’s the latest?

Today American Airlines’ CEO, Doug Parker, revealed that filing for Chapter 11 bankruptcy protection is not on the cards for the oneworld alliance’s North American member. According to Reuters, Parker said:

“Bankruptcy is failure. We’re not going to do that. I don’t think you’ll see any airline go by the wayside as a result of this crisis.”

American Airlines 737 MAX Commitment
Doug Parker said that such action would be equal to failure. Photo: American Airlines

The news will be positive for those such as American Airlines passengers and employees. Just days ago, we saw oneworld’s former South American member, LATAM, also file for Chapter 11 bankruptcy protection.

Why would Parker need to say this?

It is no secret that airlines around the world are struggling in various ways. Earlier on in the pandemic crisis, Boeing’s new CEO, Dave Calhoun, had predicted that a major United States airline would fail as a result of the current crisis. He didn’t specify which airline he was referring to.

However, some were quick to suggest that he could be talking about American Airlines. Indeed, on May 21st, a Nasdaq article wrote:

“The market is making a very strong bet that American Airlines—one of the largest carriers in the US—is going to fail.”

British Airways, Boeing 787-10, Delivery
Boeing’s CEO predicted that one major US airline would fail. Photo: Boeing

Indeed, the publications went as far as to say that investors were predicting “there is nearly a 100% chance of the Texas-based carrier defaulting in the next five years”.

What about other airlines?

Flybe was one of the first casualties of the current crisis. The airline entered administration on March 5th. However, rather than causing the airline’s collapse, the current crisis just sped up the inevitable.

America’s Miami Air filed for Chapter 11 bankruptcy protection on March 24th, followed by Alaska’s RavnAir on April 5th. On April 21st, Virgin Australia filed for Administration, followed by Air Mauritius the following day.

Air Mauritius, Administration, Voluntary administration
Last month Air Mauritius filed for administration. Photo: Airbus

However, in the past couple of weeks, there have also been several announcements close together. On May 19th, Thai Airways filed for a restructuring plan. Then, just two days later, Ecuador’s TAME also entered liquidation. Finally, yesterday LATAM announced that it was also seeking Chapter 11 bankruptcy protection.

What do you make of Parker’s comments today? Let us know your thoughts in the comments!