American Airlines today took the next step in its fleet modernization plan – to ensure that its customers are flying onboard one of the most modern fleets in the industry. Today's progress includes the redesign and refresh of the airline's international widebody aircraft – a demonstration of the forward movement of the company's business plan, which includes the investment of several hundred million dollars per year in enhancements to the customer experience. As part of this redesign, American's… (finance.yahoo.com) More...
Interestingly enough.. for many large corporations, Bankruptcy will help the balance sheet alot. By filing for bankrupty, american is able to shed off lots of old leases legally, and recoup money that would've gone down the drain. Also, by shedding off excess workers and negotiating with unions, they can actually get their budget back on track.
As for why they need this - well its an investment. Newer planes with more advanced features means more customers and better customer service experience, which will have customers come back. Operating like a low cost airline with crappy planes isn't going to help AMR much. Additionally, by shedding some of the old lease contracts, AMR needs new planes and is now free to do things like sell-and-leaseback deals to make some short term money. New fleet, modernization and investments are going to get american back on track.. provided it doesn't get taken over by us airways.
It doesn't always help balance the sheets though. Yes, American can now shed off old leases and recoup money that would have.... not gone down the drain, but gone to the company/bank that leased them the airplanes in the first place. Guess what happens to that company? Do they get revenue? Nope. American also is shedding workers, not excess workers, just workers. If it was to shed the real excess, it would get rid of the executives that helped steer AMR in this direction in the first place, but it usually results in the executives being protected and getting a pay raise. Negotiating with the unions means loss of pensions for the pilots who paid their dues. Bankruptcy should start at reorganizing the top tier, perhaps if this happened, we would see fewer companies file because they would try everything to keep the company afloat, as well as their jobs.
