American bankruptcy not likely to impact Fort Smith, XNA

by The City Wire staff ([email protected]) 105 views 

Tuesday’s (Nov. 29) announcement by American Airlines that it will seek Chapter 11 bankruptcy reorganization is not expected to change service at the Northwest Arkansas Regional Airport or the Fort Smith Regional Airport.

Fort Worth-based American is the last of the major U.S.-based airlines to file for reorganization since 2001.

“American Airlines is operating normal flight schedules, honoring tickets and reservations as usual, and making normal refunds and exchanges,” the company noted in a statement. “American expects to continue normal business operations throughout the reorganization process, and the business will continue to be operated by the Company’s management. The United States Chapter 11 reorganization process enables a company to maintain normal business operations while it establishes a competitive cost and debt structure.”

The company, which provides about 3,300 flights daily with more than 900 planes, said it has $4.1 billion in cash that will be “more than sufficient” to fund operations during the bankruptcy process. The company also named Tom Horton as AMR chairman and CEO, replacing the retiring Gerard Arpey.

Atlanta-based Delta, which operates out of XNA and Fort Smith, filed for bankruptcy reorganization in 2005. In the Delta action and in other industry bankruptcies, the airlines were able to renegotiate labor contracts and reduce or eliminate legacy pension plan obligations. American, with about 78,000 employees, does intend to seek labor cost reductions.

"Achieving the competitive cost structure we need remains a key imperative in this process and, as one part of that, we plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels,” the company noted in the statement announcing its Chapter 11 filing.

Kelly Johnson, XNA director, said there will not be an impact at the airport and also noted that this is American’s move to reduce costs.

“They are now doing what all the other airlines have done … and they basically have a chance to get out of union contracts and renegotiate” labor costs, Johnson said.

John Parker, executive director of the Fort Smith Regional Airport, agreed, saying this should give American “a fresh start.” Parker doesn’t anticipate a change in service as a result of the AMR reorganization, and added that the airport is now negotiating a new lease directly with American instead of AMR’s American Eagle subsidiary.

Enplanements at Fort Smith totaled 86,129 during 2010, up 9.81% over 2009 — an increase that ended two consecutive years of enplanement declines at the airport.

XNA, which opened in November 1998 sporting a price tag of around $110 million, has seen its traffic grow from 329,216 in the first full year (2000) to 570,625 in 2010. During the first half of 2011 the airport reported 284,505 enplanements, up 3.98% compared to the 273,589 in the 2010 period.