Chicago part of American's post-bankruptcy business plan

Many residents in the Chicago area have undoubtedly been following the American Airlines bankruptcy closely. O'Hare Airport is one of the American's major hubs, and the airline employs approximately 9,900 people locally. When completed, the company's Chapter 11 reorganization plan will be of great interest to American employees. It will reveal the airline's plan to cut costs, pay off debts to creditors, and emerge as a leaner business.

According to company executives, the airline must cut costs and jobs in order to remain competitive and achieve financial stability. Although job cuts could total 13,000, executives say the total would have been much higher if they had not sought the protection of bankruptcy. Salaries and benefits will also have to be reduced in the near term, a move that will result in estimated savings of $1.25 billion.

The airline has stated, however, that it plans to expand its operations in Chicago moving forward out of bankruptcy. American executives will increase departures at the company's five major hubs in order to drive growth in the airline's nationwide network. Chicago politicians and officials are pleased by American's proposed course of action and the commitment to the city it evinces.

The decline in the national and world economies has been difficult on many businesses. Airlines have found it particularly hard. Their business models must contend with rising fuel costs and slim margins at a time when there is falling demand for air travel. American alone has lost $10 billion in the last 10 years. But Chapter 11 bankruptcy offers distressed companies like American the opportunity to emerge leaner and stronger. It can save businesses and help them become competitive players in the economy.

Source: Chicago Tribune, "AMR cuts could include 13,000 jobs," Gregory Karp, Feb. 1, 2012.

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