American Airlines Declares Bankruptcy

This morning, November 29, 2011, American Airlines, one of the biggest airlines in the world, announced that it had declared Chapter 11 bankruptcy. It is not unexpected news, as American has been declaring losses in excess of $1 billion per year for some time. What remains to be seen is, among other things: (1) whether American will review its devotion to the “hub and spoke” system and begin a return to “point to point” routes that have allowed Southwest to remain profitable for a period of 35 years; (2) whether American will maintain its schedules throughout its system during the bankruptcy; (3) whether American will continue to court its best customers with the continuation of the “Advantage Miles” program; and (4) perhaps most urgent, whether American will enhance its customer service, in the model of Southwest Airlines, in order to retain and attract customers. The story is still unwritten. Stay tuned.

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