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American Airlines’ Sea-Tac flights operating normally despite bankruptcy

Post by John Gillie / The News Tribune on Nov. 29, 2011 at 8:55 am with No Comments »
November 29, 2011 10:02 am

American Airlines’ 12 daily flights from Sea-Tac Airport were operating normally today despite the airline’s early morning bankruptcy reorganization filing.

“American expects to continue normal business operations throughout the reorganization process, and the business will continue to be operated by the company’s management,” the airline’s parent company, AMR, said in a prepared statement.

The airline’s frequent flier programs will not be affected by the bankruptcy, the airline said.

With 4.21 percent of Sea-Tac traffic, American is Sea-Tac’s sixth busiest carrier after Alaska, Horizon, Delta, United/Continental and Southwest.

The airline flies seven daily non-stops to Dallas, four to Chicago and one to New York from Sea-Tac.

Through September, the airline has carried 1,051,265 passengers to and from Sea-Tac this year. That’s down slightly, .32 percent, from last year’s passenger traffic during the first nine months.

Sea-Tac spokesman Perry Cooper advised travelers to keep in contact with the airline or their travel agent to see if any changes happen.

Though the airline has said it plans business-as-usual during the bankruptcy, analysts expect to see substantial changes in the airline’s operations as American pares away unprofitable routes, cuts salaries and trims expenses.

Wall Street had been expecting the airline to resort to bankruptcy for months.

The airline reported a third-quarter loss of $162 million, or 48 cents a share, due to higher jet fuel prices. AMR listed assets of about $24.72 billion and liabilities of $29.55 billion in its bankruptcy petition. The company said it has $4.1 billion in cash, an amount that had been dwindling.

Two Puget-area companies have a close relationship with American.

Sea-Tac-based Alaska Airlines has a partnership with American that allows each airlines’ frequent fliers to earn and use miles on either airline. Alaska and American “code-share” numerous flights. That means the two airlines sell tickets on certain of each other’s flights as if those flights were their own.

Just last month, the two airlines announced reciprocal benefits for elite members of their frequent flier programs.

American has also been one of Boeing’s best customers. Until this summer, when it split a huge airliner order between Boeing and Airbus, American had bought Boeing planes exclusively for more than a decade.

Including aircraft built by McDonnell Douglas, which merged with Boeing in 1997, American has ordered 1181 Boeing aircraft since 1958, Boeing says.

This year, American has ordered 100 Boeing 737s and 6 Boeing 777s.

American remains up-to-date with payment of its landing fees and terminal rents at Sea-Tac said airport spokesman Cooper.

Even if an airline were to default on its payments to Sea-Tac, the airport would be paid, said Cooper. The airlines that operate at the airport have established a reserve fund from which those payments could be made in the event of a complete airline financial collapse.

That’s unlikely with American which is expected to emerge a stronger carrier after shedding some of its debts and cutting its expenses in bankruptcy.

American, the nation’s third largest carrier, is only legacy U.S. airline except Southwest and Alaska, not to undergo bankruptcy reorganization until now. Their bankruptcies gave American’s rivals cost advantages over the Fort Worth-based airline.

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