Originally Posted by
LonesomeSky
American Airlines is too big to fail. An AA liquidation would blow holes into the economies of all of its hub cities and eliminate 117,000+ jobs. It would destabilize Boeing. Congress will not let this happen. American will be saved like the auto industry and the banks during the financial crisis of 2008.
If the banks had gone under there would have been a massive upheaval in the banking system basically freezing credit (gross oversimplification). In the auto industry bailout, the argument was that those jobs would have been lost overseas forever, removing billions from the USA economy. Neither of these is true in the airline industry.
Airline hubs come and go but market forces will sort everything out in the end. Look at two former American hubs of STL and PIT. American drew down STL after the TWA purchase, but it made sense for Southwest to grow there due to the limitations of MDW. PIT...well it's just too to other hubs to make sense for anyone. Somehow the economies of STL and PIT. Here's two more former hub cities...MEM and MCI. Both seem to be doing okay also.
If American ceased operations there would be a short term disruption for consumers, but there is plenty of supply that can be brought on almost instantly. As in past airline bankruptcies other airlines will be quick to honor American ticket holders which will assuage the main concern of politicians. Moreover, those jobs will not be lost, just transferred over to stronger competitors. Boeing will be okay, if there is demand for those airplanes, they'll be taken by other airlines. In any case, I doubt that American's orders are more than 2% of Boeing total order book, and it's not assured that American will take those airplanes even if they survive.
Allowing American to become a "zombie corporation" is not beneficially to the overall economy or the consumer. While I feel for the employees that would be devastated, they were let down by management taking on so much more debt than their competitors management and being in the worst position for an inevitable downturn. It's certainly very hard to predict to predict if there will be government intervention, but I would wager that the chances for help specifically targeted for American would be extremely low.
Something major is likely to happen with American in 2021, it's likely going to be ugly, and the company will be significantly changed. Too think American can go through a straightforward Chapter 11 and resume pretty much as they exist today is wishful thinking.