The American Airlines Bankruptcy and Your Frequent Flier Miles

by Meg Favreau on 30 November 2011 0 comments
Photo: Luis Argerich

On November 29, AMR Corp. — American Airlines' parent company — filed for Chapter 11 bankruptcy. The bankruptcy isn't exactly a surprise. Up until this point, American was the only "legacy" carrier to not have declared it — in fact, a few of the major airlines have even been through bankruptcy twice, and they're still flying the (somewhat) friendly skies.

The main concern many consumers have now is whether their frequent flier miles and reservations will be honored by the ailing air carrier. American Airlines sent an email to their AAdvantage frequent flier members, stating "We want to assure you that your AAdvantage miles are secure." Likewise, they promised that they are "honoring all tickets and reservations as usual" throughout the bankruptcy process. (See also: The 5 Best Travel Reward Credit Cards)

"Throughout the bankruptcy process" is the key phrase here, and it means both good news and uncertainty for consumers. One important point to remember, after all, is that Chapter 11 bankruptcy is not the end of a company; it's a restructuring to help make the company profitable again. Thus, those who already have reservations or miles built up with American have little to worry about, and customers will continue to earn miles as they fly.

However, there are several other long-term concerns. If the company does survive, they'll be operating leaner — which could mean fewer flights, higher ticket prices, and more difficulty in booking rewards trips.

There is also, of course, concern that the company could go under even after restructuring. All hope isn't lost in terms of miles, however. Bruce Watson from AOL's DailyFinance reported Tuesday that,

In previous bankruptcies and mergers, the companies that bought failed airlines generally went to great lengths to maintain their relationships with the failed fliers' customers. In the case of Eastern, TWA and Pan Am, this included honoring the failed carriers' frequent flier miles.

So what should you do for the moment if you're an AAdvantage member? Fly your regularly scheduled flights, and don't panic. After all, many of the air carriers that went through bankruptcy are still operating, including Delta, US Air, and Continental. If you do have enough frequent flier miles saved up to get a free ticket, though, some experts are recommending using them soon just to be safe. FoxNews.com interviewed Katie Hanni, executive director of Flyersrights.org, who said that "people should use up their frequent flier miles and, if they can, book on co-chair partners who aren't filing for bankruptcy. The passengers are the last creditor on the list and the last to know."

Are you an AAdvantage member, or do you have travel booked on American Airlines? Are you worried about your miles or reservations? Share your thoughts in the comments.

5
Average: 5 (2 votes)
Your rating: None
ShareThis

comments

0 discussions

Add New Comment

CAPTCHA
This test helps prevent automated spam submissions.