American Airlines Files for Ch. 11 Protection

[MrFSS]

FORT WORTH, Texas (AP) - American Airlines' parent company is seeking Chapter 11 bankruptcy protection as it seeks to unload massive debt built up by years of accelerating jet fuel prices and labor struggles.

The nation's third largest airline also said its CEO Gerard Arpey will step down. He's being replaced by Thomas Horton, currently the company's president.

Fort Worth, Texas-based AMR Corp., along with its regional affiliate AMR Eagle Holding Corp. said Tuesday that they filed voluntary petitions to reorganize.

American says it sought protection to reduce its costs and debt to remain competitive. The airline says it will continue normal flight operations during the reorganization.

FULL STORY

 

[Oldsmoboi]

but if you try to get away without paying your debts - The Dickens You Say? In more than a third of US states, debt collectors can get arrest warrants for people who are behind on their bills.

 

[Devil's Advocate]

I haven't been following the airline world that closely anymore but I guess you could say this has been in the cards for a long time now. AA actually had a surprisingly good product back during the 1980's. Even as a young boy flying alone I strongly preferred them over other airlines of the era. During the MRTC years I remained loyal to AA. When the MRTC product was discontinued I left for E+ at UA and never looked back. Then UA quietly changed some expiration schedules and I ended up moving on again. Continental was likely to be my next carrier of choice but by that time I was no longer flying as much and CO had become just another commodity player like everyone else. As a result I tend to fly whoever is the cheapest among the major carriers. Occasionally I might splurge for an Asian or European legacy carrier if the price is right but for the most part I just buy on price like I suspect most folks do.

 

[jis]

This was long time in coming and was quite inevitable actually.

 

[Anderson]

but if you try to get away without paying your debts - The Dickens You Say? In more than a third of US states, debt collectors can get arrest warrants for people who are behind on their bills.

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

 

[leemell]

This was long time in coming and was quite inevitable actually.

AA was the only major that did not file Chap. 11 after 9/11 wiped out the industry. So in a way, that is true.

 

[Devil's Advocate]

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

In many cases individuals are no longer allowed to simply write off their debt like large businesses can. I'm curious what sort of advice you would give to a first time home buyer who still owes $450,000 on a house that is only worth at most $200,000 on a good day. Just keep on paying double or even triple the true value simply because you were the last one caught holding the hot potato? Maybe if the banks had to take their lumps as well, but I never saw any of that. I saw the banks who screwed up thousands of loans get away with everything while the home owners who screw up a single solitary loan got stuck with everything. Maybe that's just how capitalism is supposed to work?

 

[Bob Dylan]

but if you try to get away without paying your debts - The Dickens You Say? In more than a third of US states, debt collectors can get arrest warrants for people who are behind on their bills.

Can this really be true? Have we regressed to old England where there were Debtor Prisons and Forced Labor for the poor? Billions for Wall Street and Big Bank Crooks and no-one goes to jail , and they want to ARREST people who get behind on their bills? :wacko: Time for another Revolution,the 2012 Elections are coming up, lets throw ALL the Politicians out that have created this mess!!! :excl: :excl: :excl:

 

[Oldsmoboi]

but if you try to get away without paying your debts - The Dickens You Say? In more than a third of US states, debt collectors can get arrest warrants for people who are behind on their bills.

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

The Banks got the law changed so now many new mortgages/refis/adjustments are now "recourse loans". Meaning even after they take the house through foreclosure and boot you onto the street, any deficit between the bank's sale price of the house and your balance is owed by you for eternity.

 

[Oldsmoboi]

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

In many cases individuals are no longer allowed to simply write off their debt like large businesses can. I'm curious what sort of advice you would give to a first time home buyer who still owes $450,000 on a house that is only worth at most $200,000 on a good day. Just keep on paying double or even triple the true value simply because you were the last one caught holding the hot potato? Maybe if the banks had to take their lumps as well, but I never saw any of that. I saw the banks who screwed up thousands of loans get away with everything while the home owners who screw up a single solitary loan got stuck with everything. Maybe that's just how capitalism is supposed to work?

I wish you could come to the politics section on my board, you'd have a field day.

I have a running thread there documenting all of the fraud by the banks in the news..... and that's just the stuff that gets reported.

 

[Anderson]

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

In many cases individuals are no longer allowed to simply write off their debt like large businesses can. I'm curious what sort of advice you would give to a first time home buyer who still owes $450,000 on a house that is only worth at most $200,000 on a good day. Just keep on paying double or even triple the true value simply because you were the last one caught holding the hot potato? Maybe if the banks had to take their lumps as well, but I never saw any of that. I saw the banks who screwed up thousands of loans get away with everything while the home owners who screw up a single solitary loan got stuck with everything. Maybe that's just how capitalism is supposed to work?

but if you try to get away without paying your debts - The Dickens You Say? In more than a third of US states, debt collectors can get arrest warrants for people who are behind on their bills.

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

The Banks got the law changed so now many new mortgages/refis/adjustments are now "recourse loans". Meaning even after they take the house through foreclosure and boot you onto the street, any deficit between the bank's sale price of the house and your balance is owed by you for eternity.

Yes, and that is why if you're in that situation you declare bankruptcy. It's not pretty, the house will likely be going away in the process (as well as most non-exempt assets), but at most the banks will be able to get some of their money back via a Chapter 13 bankruptcy. But if you're $250,000 in the hole with no hope of recovery and the debts are unmanageable, that would be my advice: Pull the trigger on the bankruptcy and get it over with.

Also, to be blunt, even chasing people down with recourse loan pursuits, banks are taking lumps in the form of (as noted above) lots of money not being paid back for years even if they eventually get the loan value back. Something about the time value of money comes to mind here. And if someone declares bankruptcy, that's almost always going to limit what can be claimed, asset-wise.

 

[Devil's Advocate]

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

In many cases individuals are no longer allowed to simply write off their debt like large businesses can. I'm curious what sort of advice you would give to a first time home buyer who still owes $450,000 on a house that is only worth at most $200,000 on a good day. Just keep on paying double or even triple the true value simply because you were the last one caught holding the hot potato? Maybe if the banks had to take their lumps as well, but I never saw any of that. I saw the banks who screwed up thousands of loans get away with everything while the home owners who screw up a single solitary loan got stuck with everything. Maybe that's just how capitalism is supposed to work?

but if you try to get away without paying your debts - The Dickens You Say? In more than a third of US states, debt collectors can get arrest warrants for people who are behind on their bills.

Yes, unless you file for bankruptcy, at which point those proceedings tend to get stopped cold since bankruptcy, being a federal proceeding, preempts any such state proceeding. The jam tends to occur when people decide not to declare bankruptcy while not even trying to pay their debts (witness the number of people living in homes where foreclosure proceedings are jammed up but where they're not even attempting to make payments).

The Banks got the law changed so now many new mortgages/refis/adjustments are now "recourse loans". Meaning even after they take the house through foreclosure and boot you onto the street, any deficit between the bank's sale price of the house and your balance is owed by you for eternity.

Yes, and that is why if you're in that situation you declare bankruptcy. It's not pretty, the house will likely be going away in the process (as well as most non-exempt assets), but at most the banks will be able to get some of their money back via a Chapter 13 bankruptcy. But if you're $250,000 in the hole with no hope of recovery and the debts are unmanageable, that would be my advice: Pull the trigger on the bankruptcy and get it over with.

What exactly do you see being gained by adding ten years of individual bankruptcy status to a foreclosure situation?

Also, to be blunt, even chasing people down with recourse loan pursuits, banks are taking lumps in the form of (as noted above) lots of money not being paid back for years even if they eventually get the loan value back. Something about the time value of money comes to mind here. And if someone declares bankruptcy, that's almost always going to limit what can be claimed, asset-wise.

In the past bankruptcy provided some protections in exchange for perpetually wrecked credit. At this point it's mainly just a payment restructuring scheme in the service of keeping lenders happy. Frankly, I can't think of a single major win for American consumers at the expense of any lender or other business entity during the last thirty odd years of "trickle down" supply-side economic policy.

 

[jis]

This was long time in coming and was quite inevitable actually.

AA was the only major that did not file Chap. 11 after 9/11 wiped out the industry. So in a way, that is true.

Well strictly speaking it was probably avoidable if AA could extract enough givebacks from the Unions. But that was not to be. They were more interested in talking about guaranteeing rooms away from elevators out of station and such other exceedingly important issues instead, apparently. But on the whole it will probably work out quite well for AA if the packaged bankruptcy deal goes through without significant modifications by the judge.