The future of American Airlines

American’s labor groups — including Flight Attendants — have now approved new wages, averting bankruptcy for the airline.

American projects $1.8 billion in annual savings from these agreements. However, the airline lost $3.5 billion last year.

While they have made other cuts that they say will save $2 billion, some of those cuts were in force while they were losing $3.5 billion — so they’re farther off from profitability than just adding $1.8 billion and $2 billion together.

The airline needs bookings to pick up and the economy to improve or they will continue to lose large sums of money. These labor agreements buy them time to get their house in order and for external conditions to change. But both of those must happen or American will find itself staring bankruptcy in the face again.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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