Sooner or later, American will reduce schedule

It certainly won't happen during the holidays, so that's not a problem. But reducing costs is a major reason for any bankruptcy filing, and with American that will mean fewer flights. The airline's new CEO, Thomas Horton, suggested as much today, though he offered no details. From AP:

All airlines will benefit from crowded planes and higher prices if American reduces the number of its flights, said Helane Becker, an analyst with Dahlman Rose & Co. The losers: AMR stockholders almost certainly will be wiped out. The stock had already lost 79 percent of its value this year on fears of bankruptcy. The stock fell to 31.5 cents Tuesday, down almost $1.32 from the day before. In January 2007, after a four-year rally, shares were worth more than $40. AMR has lost more than $12 billion since 2001, and analysts expect it will post more losses through 2012. Speculation about an AMR bankruptcy grew in recent weeks as the company was unable to win union approval for contracts that would reduce labor costs.

The speculation is that at some point American will try to merge with US Airways. That would leave five major U.S. carriers. Aside from movies, there are few businesses more frustrating than airlines. For legacy carriers like American, it comes down to three huge costs: fuel, labor, and planes - and there's very little give on any of them.


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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