Airline bankruptcy filing hits home

News of American Airlines' and American Eagle's parent company's bankruptcy protection filing late last year splashed the front pages of newspapers across the nation. But the news hit closest to home for more than 24,000 employees based in North Texas and communities that rely on the airlines' success.

Fort Worth-based AMR Corp. ranks among the top employers in the Dallas/Fort Worth area, and is the top taxpayer to Grapevine at more than $1.02 million annually.

"Their economic success over the long term is just critical—it just is," Grapevine City Manager Bruno Rumbelow said. "It is not only important for Grapevine, but it is important for the region."

American Airlines and American Eagle sat out bankruptcy in the past decade while their competition, parent companies of Northwest, Delta and United Airlines, filed for Chapter 11. AMR filed for Chapter 11 on Nov. 29 in U.S. Bankruptcy Court in New York as an effort to cut labor costs and restructure debt. Area leaders are rooting for American and hoping its parent company will emerge from bankruptcy, as its competitors have.

Southlake Mayor John Terrell, who is also vice president of commercial development at Dallas/Fort Worth International Airport, is optimistic about the airline's future.

"I think that we are fairly confident that American Airlines is going to come out of bankruptcy stronger than they were before," he said. "Because DFW Airport is their low-cost hub, we may actually see expansion of American Airlines' people and workforce in this area, as opposed to some of their locations across the country."

Recent changes

As a result of the filing, American Eagle is scheduled to return 21 of its ATR-72 turboprop aircrafts—15 of which serviced the Dallas/Fort Worth area—to the leasing company by the end of the month, AMR spokesman Tim Smith said. The aircraft will be replaced with Embraer regional jets.

The ATR-72s' discountinuation led to route cancellations. American Eagle will end service between DFW Airport and Augusta, Ga., on Jan. 31, and service between Fayetteville, N.C. and DFW, a result of poor financial performance, Smith said.

In a separate move, American Airlines on Jan. 9 announced route cancellations and 150 job cuts outside of the DFW area as a result of winter schedule reductions, the loss of a U.S. Postal Service domestic mail contract and the closure of a St. Louis-based ground service equipment refurbishment shop.

It will end service between DFW Airport and Burbank, Calif., on Feb. 9, close the Burbank operation staffed by a third party and drop service between Chicago and New Delhi effective March 1.

Possible changes ahead

As AMR sorts out its reorganization, there may be a possibility of more aircraft returns, route changes and staff reductions in the months ahead.

"The degree or the amount of where they will be is unknown," Smith said.

AMR has between 24,000 and 25,000 employees in North Texas, including pilots, flight attendants and management staff.

In early December 2011, American Eagle furloughed 20 junior pilots after completing their first week of training.

A furlough in the airline industry is a layoff with guaranteed right to employment based on seniority when the employer hires again, American Eagle Capt. Dave Ryter said.

While those pilots are out looking for work, employed pilots are worried about their future.

"There are pilots who are very junior, who are nervous that they may be placed on furlough as a result of this bankruptcy, and there are pilots who are very senior who are nervous about the long-term survivability of their company," Ryter said. "So I think everybody is feeling some apprehension."

Ryter is also vice chairman of American Eagle's Air Line Pilots Association, International, a union representing 3,200 American Eagle pilots. Approximately 900 of the union's pilots are based in North Texas, Ryter said. American Airlines pilots are represented by the Allied Pilots Association.

AMR employees are updated about the bankruptcy situation on the company's intranet and restructuring website.

"We have pledged to our employees and everyone else as items come through bankruptcy court ... and they are finalized on, we will immediately let anyone affected by any decisions or changes know," Smith said.

Local impact to cities

Neighboring cities are bracing for the effects from the looming possibility of cutbacks.

As one of three cities the DFW Airport sits on, Grapevine is heavily dependent on tourism. Among Grapevine's major employers are the Gaylord Texan Resort and Convention Center, DFW Airport and AMR Eagle Holding Corp.

Grapevine also receives hotel occupancy taxes collected from overnight guests at its 20 hotels. According to city data, Grapevine collected $10.7 million in such taxes during the fiscal year ending Aug. 30, 2010. The money collected is used specifically for tourism-related projects, such as festival marketing and building the new Convention and Visitors Bureau's building on Main Street.

When hotel taxes dip, the city gets less revenue, and the effects trickle down to local businesses, said RaDonna Hessel, president and CEO of the Grapevine Chamber of Commerce, which represents nearly 800 businesses.

"When they slow down the flights, they slow down the number of hotel rooms that they're using," she said. "Their employees are of course concerned. They don't spend as much money, so they don't come out. They don't shop."

According to city data, Southlake collected $657,313 in hotel occupancy taxes from rooms at the Hilton Southlake Hotel in 2010. Southlake has used the money to promote the city through events such as Home for the Holidays and Stars & Stripes, its annual Fourth of July show.

At the DFW Airport, AMR accounts for 85 percent of passenger traffic, airport spokesman David Magaa said.

"We think we are going to provide a very good home for American Airlines in the future, and what that future will look like is up to the airline," he said.

AMR occupies all of Terminals A and C, and most of Terminals B and D at DFW Airport, Magaa said. There may even be a possibility of slowdowns or changes to the airport's planned $1.9 billion in terminal renovations currently underway because of American's struggle, he said.

AMR will likely be somewhat smaller when it surfaces from bankruptcy about a year from now, Smith said. And it may not be alone. A common decision among airlines facing bankruptcy is to merge with other providers, and US Airways Group, Inc., Delta Air Lines, Inc. and TPG Capital are all said to be considering a deal with AMR. Smith would not comment on the possibility of a merger, but said he was optimistic about the future.

"Hopefully, we will emerge with a cost structure that will allow us to start growing again and at the same time be competitive with the other airlines," he said.



MOST RECENT

(Courtesy AMC Theatres)
AMC Theatres to reopen Aug. 20 with 15-cent tickets

AMC Theatres—which has multiple locations in the Austin, Dallas-Fort Worth and Houston areas—will begin reopening its movie screens Aug. 20.

The beginning of 2020 showed that travel at the Dallas Fort Worth International Airport was higher than in 2019. (Michelle Degard/Community Impact Newspaper)
DATA: See how airports' passenger traffic has changed amid pandemic

The beginning of 2020 showed that travel at the Dallas Fort Worth International Airport was higher than in 2019.

(Ellen Jackson/Community Impact Newspaper)
Grapevine-Colleyville, Carroll ISD graduates plan around pandemic ahead of fall semester

Grapevine High School alumna Elizabeth Reed had her freshman year of college planned out: She would attend the University of Alabama in the fall and bunk with a roommate from Connecticut that she was already getting to know.

According to the report, 380,174 total COVID-19 cases have been reported in children nationwide as of Aug. 6, which accounts for approximately 9.1% of all confirmed COVID-19 cases in the U.S. (Courtesy Adobe Stock)
REPORT: COVID-19 cases in children increase by 90% nationwide in 1 month

As school district officials across the U.S. prepare for the start of the 2020-21 school year, 179,990 new COVID-19 cases were reported in children nationwide between July 9 and Aug. 6—an increase of 90%, according to a report compiled by The American Academy of Pediatrics and the Children's Hospital Association.

The University of Texas will host football games at Darrell K. Royal Veterans Memorial Stadium this fall after an announcement from the Big 12 Conference on Aug. 12 that the fall sports season will continue. (Jack Flagler/Community Impact Newspaper)
After Big Ten and PAC-12 cancel, Big 12 announces fall sports season will roll on

The conference football season will begin Sept. 26, and fan capacity in stadiums will be up to each of the 10 member universities, according to the Big 12.

(Courtesy Maykus Homes)
5 luxury homes to be built on Kimball Ave. in Grapevine

Maykus Homes broke ground in early July on a new, five-unit housing development at the 2300 block of North Kimball Avenue in Grapevine.

54th Street Grill opened in McKinney in August. (Courtesy 54th Street Grill)
54th Street Grill opens in McKinney and more DFW-area news

Read the latest community and business news from the DFW area.

(Courtesy Pure Cafe)
Pure Cafe in Southlake changes ownership, to update menu this year

Quyen Tong became the new owner of Pure Cafe in November.

About 57% of students will return for in-person learning, while about 43% will be part of the district's Dragon Virtual Academy. (Courtesy Adobe Stock)
2 Carroll ISD staffers test positive for COVID-19 as district prepares to start school Aug. 24

As Carroll ISD's first day of school on Aug. 24 approaches, two staff members have tested positive for COVID-19.

(Community Impact Newspaper staff)
DATA: Tarrant County COVID-19 hospitalizations on decline

The total COVID-19 cases in Tarrant County surpassed 34,000 as of Aug. 10.

Richardson Bike Mart has about 11,000 bicycles on back order. (File photo/Community Impact Newspaper)
Richardson shop has 11,000 bicycles on back order and more DFW news

Read the latest Dallas-Fort Worth business and community news.

Thirteen drive-thru grocery stores operated by the Salvation Army of North Texas are offering backpacks filled with supplies. (Courtesy Salvation Army)
Salvation Army expands North Texas grocery service locations to include school supplies, protective equipment

Backpacks filled with school supplies, personal protective equipment, financial assistance resources and U.S. Census forms will be available at the 13 existing locations.