On November 29, 2011 AMR corporation, owner of American Airlines, filed for Chapter 11 bankruptcy protection. AMR filed for bankruptcy under Chapter 11, to protect their current assets from debt collectors. There were many reasons why AMR filed, and events leading up to the event. But overall, I think the main reason is costs; which have increased drastically for airlines throughout the years. A major component is deregulation that created unwanted consequences for domestic airlines. AMR is one example of how some areas such as airlines need common sense regulation. Under President Jimmy Carter, The Airline Deregulation Act of 1978, lifted government control over prices, fees, and flights. This meant that airlines were no longer held down by …show more content…
The former AMR CEO Bob Crandall stated, “AMR could not get the unions, particularly the pilots union, to make a deal that would yield costs equal to those of the other carriers.” AMR was paying more than the other airline “$800 million” (CNBC) for labor contracts with pilot Unions. Since the early 2000s, AMR had struggled to stay out of bankruptcy by adhering to demands of labor Unions.The labor Unions overall asked for massive increases, benefits and wages. These involved all aspects of the airline including airplane maintenance workers, baggage workers and attendants. Unusual for most companies today, throughout the 2000s AMR conformed instead of contracting the work out. Losing millions every year. Later in 2010 the early stages of bankruptcy, AMR tried cutting pensions, benefits and cutting its workforce significantly. The labor Unions denied these cost cutting plans, holding out to get leverage. Then in 2011, AMR had no alternative to stay competitive and had to file for bankruptcy because there was no way out of the labor contracts. The merger with US Airways allowed the Unions to agree to new Labor contracts that were agreed upon on both sides. Overall, Filing Chapter 11 bankruptcy was a blessing for