Obamanomics Takes Down AA

[BillyV]

American Airlines is slated to become the next major victim of Obama's Failed Economic Ideas.

"Airline stocks were down broadly on concerns that a weak economy will drain travel demand and hit fares this autumn."

Airline stocks were down broadly on concerns that the Obama economy will drain travel demand and hit fares this autumn....corrected

Nice try, but no...American is declaring bankruptcy so they can a.) Reduce labor costs - they have spent the last 4 years trying to negotiate with the unions, who have refused to budge; now AMR will be in a position to dictate how any new labor contracts are structured; b.) Eliminate some unprofitable routes (and the associated labor costs - see a.)) and c.) They want to walk away from older jets under long-term leases that are no longer profitable (29% of their fleet), in favor of 460 new planes that have already been ordered. It will also allow them to void any executory contracts, such as long-term terminal leases in unprofitable markets.

The shareholders will undoubtedly be wiped out, but given the stock is already down 79% for the year, they probably decided that was much less of an issue. Employees will be the ones that bear the brunt of the filing. Too bad the union wasn't more realistic in its demands.