American Airlines is in Chapter 11 bankruptcy supervised by
a bankruptcy judge in federal court following normal procedures. American’s
goal is to emerge from bankruptcy as a profitable concern. All of American’s stakeholders – unions,
creditors, management, etc. -- are represented and are fighting each other
tooth and nail, as they should. American’s management wishes to abrogate union
contracts that have made it the highest-cost carrier in the business. Management
is trying to extract work rule concessions from reluctant unions. Unions are
fighting to protect their contracts and pensions and minimize layoffs. Another carrier, U.S. Air, is circling overhead,
trying to lure stakeholders into a U.S. Air-American Airlines merger.
No matter what, jobs will be lost but probably not more than
ten percent. Either a stand-alone American or an American merged with U.S. Air
will emerge from bankruptcy, and all the interested parties will have defended
their legitimate interests as best they can before an impartial judge. If all
goes well, American can survive and make profits.
The American Airlines bankruptcy shows how the GM and Chrysler
bankruptcies should have proceeded. Instead the of federal government grabbing the
bankruptcy proceeding in a biased way towards the unions and to the
disadvantage of creditors or potential third-party bidders, GM and Chrysler
could have gone through a normal bankruptcy and emerged with lower costs, free
from government diktat, and able to make
their own decisions.
The American bankruptcy case again exposes the emptiness of
Obama’s claim that “he saved Detroit.”
Dr. Gregory's latest book can be found at Amazon.com.
Dr. Gregory's latest book can be found at Amazon.com.
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