I agree that control was probably a big reason. These execs like to run airlines and, just like you, they're willing to work for airlines for less than their skills could bring them elsewhere. Just like eolesen until he left. Other reasons include the fear that Ch 11 in 2003 might have meant liquidation (complete loss of their airline to run). I'm certain they have some huge egos and get satisfaction from running airlines.
I've posted before that UAL spent about $660 million on bankruptcy lawyers, accountants, advisors, investment bankers and other parasites during its three year stay. Then, upon exit from Ch 11, the execs wanted 15% of the new stock. The court trimmed that to 8% IIRC. AA didn't spend any money like this on bankruptcy, leaving it to pay for exec bonus plans (and 35 million stock options for the employees).
Arpey and the AA board may have wanted to prove to everyone that they could accomplish the same thing without spending the money on bankruptcy or wiping out the pilots' pensions. Pilots whose pensions were canceled tend to be even more disgruntled than APA members. BoeingBoy is a notable exception - he seems like a pretty easy-going guy considering what US did to his retirement. They didn't do it to be nice to the pilots - they did it because not wiping out their pensions might keep them happier employees. Might keep them from striking. Might keep them "working together" longer.
Horton recently said that AA paying its bills (not filing Ch 11) has had its dividends, like more favorable lending terms and rates.
US wiped out its shareholders and gave debtholders stock in the first bankruptcy. Then, in round two, US wiped out those shareholders (used to be holders of debt) and gave the new stock to those who still held debt at the end of round one (including lenders of new money). You don't pay your bills and you wipe out the stock you give your creditors instead of paying them and eventually you'll have to pay higher rates and face more stringent terms to borrow money. Like US has ever since.
Another big reason AA didn't file is that AA did not have the same problem faced by US and UA: their pensions were severely underfunded and they were facing multi-billion dollar contributions they didn't have. AA's pensions had much smaller deficits (better money management, in my view) and thus weren't facing the same trigger. Once DL ran thru its huge post-September 11 cash pile, it had to do the same thing: cancel its pilots pensions because it couldn't afford the makeup contributions. US and UA had to file Ch 11 to avoid default on their pensions and other debts.
I'm certain there are other reasons AA did not file Ch 11 and that management would not subscribe to all of my WAG above.
Bottom line, AA was able to cover its pensions and other debts without Ch 11. Most other airlines were not able.
I've posted before that UAL spent about $660 million on bankruptcy lawyers, accountants, advisors, investment bankers and other parasites during its three year stay. Then, upon exit from Ch 11, the execs wanted 15% of the new stock. The court trimmed that to 8% IIRC. AA didn't spend any money like this on bankruptcy, leaving it to pay for exec bonus plans (and 35 million stock options for the employees).
Arpey and the AA board may have wanted to prove to everyone that they could accomplish the same thing without spending the money on bankruptcy or wiping out the pilots' pensions. Pilots whose pensions were canceled tend to be even more disgruntled than APA members. BoeingBoy is a notable exception - he seems like a pretty easy-going guy considering what US did to his retirement. They didn't do it to be nice to the pilots - they did it because not wiping out their pensions might keep them happier employees. Might keep them from striking. Might keep them "working together" longer.
Horton recently said that AA paying its bills (not filing Ch 11) has had its dividends, like more favorable lending terms and rates.
US wiped out its shareholders and gave debtholders stock in the first bankruptcy. Then, in round two, US wiped out those shareholders (used to be holders of debt) and gave the new stock to those who still held debt at the end of round one (including lenders of new money). You don't pay your bills and you wipe out the stock you give your creditors instead of paying them and eventually you'll have to pay higher rates and face more stringent terms to borrow money. Like US has ever since.
Another big reason AA didn't file is that AA did not have the same problem faced by US and UA: their pensions were severely underfunded and they were facing multi-billion dollar contributions they didn't have. AA's pensions had much smaller deficits (better money management, in my view) and thus weren't facing the same trigger. Once DL ran thru its huge post-September 11 cash pile, it had to do the same thing: cancel its pilots pensions because it couldn't afford the makeup contributions. US and UA had to file Ch 11 to avoid default on their pensions and other debts.
I'm certain there are other reasons AA did not file Ch 11 and that management would not subscribe to all of my WAG above.
Bottom line, AA was able to cover its pensions and other debts without Ch 11. Most other airlines were not able.
