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A bankruptcy success story

We have blogged extensively on the bankruptcy of American Airlines and the legal background behind its subsequent merger with US Airways. We are happy to learn that this Chapter 11 reorganization and the two airlines’ merger have been largely successfully and this blog may, in fact, be the last one on this topic.

AMR, the parent company of the old American Airlines was under bankruptcy protection for about two years. During that time, bankruptcy law limited creditor’s rights to receive payments from American. Additionally, through tough negotiations on labor costs and other financial operations measures, the airline lifted itself out of bankruptcy and merged with US Airways. The United States government did challenge the merger, but allowed it to go through in December 2013. The new American Airlines Group (AAG) has a profit when one looks at the accounting in certain ways according to the Financial Times on January 28, 2014.

If one looks at profits on revenue for American and US Airways combined, then AAG was profitable. In fact, it earned $1.9 billion in profits on $40.4 billion revenue in 2013. This is an increase from $407 million in profits on $38.6 billion in revenue the year before—a corporate bankruptcy success story. Passenger revenue per “seat-mile” increased over the same time period as well. It looks like AAG will succeed, in thanks to AMR’s Chapter 11 bankruptcy. This case shows that with careful planning, you can get back on your feet after bankruptcy.

If you are in debt, whether it is credit card debt, mortgage payments, medical bill debt or you are behind on your auto loan payments, and you are considering bankruptcy, then you should contact an experienced, qualified attorney. Jayson Lutzky has been practicing law in New York for the past 30 years. He offers free in office initial consultations for prospective clients considering personal bankruptcy. To set up an appointment, call 718-329-9500 or visit www.MyNewYorkCityLawyer.com.

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