American Airlines’ Arpey: no regrets about dodging Chapter 11

American Airlines fin.jpg

American is famously still the only one of the US majors not to have resorted to Chapter 11 to sort out its problems over the years, and analysts have always had mixed views as to whether that was smart or not.

I’ve been struck by two things about it: the detectable pride that many in the company take in that record, but also the continuously abrasive labour relations that seem to be a fact of life at American. How management there has the stamina for it I don’t know. (I wrote about this before.)

Nevertheless, CEO Gerard Arpey has never expressed any regrets about the strategy and he’s just taken the chance to not do so again in a speech at a Dallas Business Journal event carried in full at the Fort Worth Star-Telegram’s Sky Talk blog.

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5 Responses to American Airlines’ Arpey: no regrets about dodging Chapter 11

  1. Frank Tucker December 10, 2008 at 7:44 pm #

    The reason labor relations are difficult at AA — and other airlines — is the misguided notion on the part of pilots in that industry who pine for some romanticized notion of the “good old days” and refuse to confront the reality that the industry has changed (as have labor rates for airline industry jobs) This is a recognized reality in the auto, steel, newspaper and retail industries, yet these so-called sky gods, even from their high perch, can’t quite grasp the reality of a global economy and competitive market.
    Sad.

  2. Seamus December 11, 2008 at 2:48 am #

    When you think about the industry’s financial state, it’s actually pretty incredible (and laudable) that AA didn’t go the bankruptcy route. An unfortunate side effect is that most of AA’s competitors – who did go through the courts to restructure – were able to reduce their labor costs and dump their pension liabilities on the federal government. That means AA is it a serious disadvantage trying to keep its costs in line with the rest of the industry.

  3. Kieran Daly December 19, 2008 at 10:49 am #

    I think Seamus must be right about the financial consequences, but fact is that some US majors have now been in Chapter 11 twice and still not come out in startlingly better shape. In fact, if it were such a great idea, you’d expect those guys to be eating American alive which they’re clearly not.

  4. mutuelle October 4, 2010 at 11:08 am #

    The industry is in a poor financial state?Thay are in better shape now?I believe that the Americans are indeed smart.

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