Wall Street seems in a panic over the outlook for American Airlines, and the prospect that the only major US carrier that has avoided Chapter 11 restructuring in recent years may be forced into a filing due to the economic slowdown. With a major order for more than 400 aircraft in place, AA’s new fleet would generate significant savings and help the carrier become more competitive. But if it is forced to restructure, will it be able to take delivery of new orders of that magnitude, and will it find a more difficult time financing them?

It is amazing that American has survived this long without a filing, as the elimination of competitor debts has placed it at a competitive disadvantage vis-a-vis those who have filed. But it has steadfastly tried to compete the best it can, despite disadvantages, and is finding this double-dip economic recession difficult, with continuing losses. American is attempting to shed American Eagle, and sell other assets to maintain its operations without having to resort to Chapter 11, but the vultures now appear to be circling overhead.

AA could take the easy way out and file for bankruptcy – but that would be antithetical to its culture and management. Always a fighter, here’s hope that AA can find a way to more effectively compete without resorting to restructuring.

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