Home News Local news IMPACT UNCLEAR IF AMERICAN FILES FOR BANKRUPTCY

IMPACT UNCLEAR IF AMERICAN FILES FOR BANKRUPTCY

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March 11, 2003 – American Airlines, the territory's major carrier, could follow in the wake of US Airways and United Airlines and file for federal bankruptcy protection, The New York Times reported on Tuesday.
If that is the case, however, it will not necessarily be bad news for the territory in terms of airlift, Bob Siefert, general manager of the Divi Carina Bay Beach Resort on St. Croix, said. It is unlikely the airline would stop flying to the territory if it seeks federal protection from creditors while it reorganizes, he said.
"US Airways is in bankruptcy, and we're getting another flight, "Siefert noted, citing USAir's recent announcement that it will add a Saturday direct flight from Charlotte, North Carolina, to St. Croix starting March 15.
Siefert, president of the St. Thomas-St. John Hotel Association in the early 1990s and most recently president of the St. Croix Hotel and Tourism Association, said he thinks United will continue to fly despite its bankruptcy status, as well.
Delta Air Lines and Continental Airlines are the other major airlines serving the territory.
Myrna George at the St. John travel agency At Your Service said bankruptcy proceedings could force American to raise its fares, however. And, she predicted, "Any increase in price, and people will find another destination."
George and Siefert both said that the United States' looming war with Iraq poses a bigger threat to the territory as a tourism destination than American Airlines' potential bankruptcy.
"People are afraid of flying," George said.
Siefert said that while President Bush is focusing his efforts on a possible war with Iraq, the nation's economy is continuing to slump.
According to The New York Times, American Airlines is looking for up to $2 billion in financing to continue operating, should it decide to seek Chapter 11 bankruptcy protection.
In January, AMR Corp., American's parent company, listed a loss of $529 million for the fourth quarter of last year. The company is continuing to seek wage and benefit concessions from its unionized workers in an effort to avoid bankruptcy filing. American needs to cut $4 billion a year in operating costs to remain solvent, according to reports.
In the midst of such economic uncertainty, the V.I. Port Authority, to shore up its own flagging finances, increased airport landing and passenger fees by 25 percent as of Feb. 1. As a carrot with the stick, VIPA exempted flights introduced after March 1 exempt from the higher rates for one year.
American subsequently announced that it would terminate seasonal flights out of Boston and New York in April. The service had previously been scheduled to continue until June.
Efforts to learn how many passengers fly American to the territory every year were unsuccessful.
The Port Authority's Web site lists a total of 816,144 passengers inbound and 825,078 outbound on all airlines for 2001, the most recent year for which figures are available. St. Thomas's Cyril E. King Airport saw the majority of them, with 586,961 flying in and 595,594 flying out. On St. Croix, 229,185 passengers arrived at Henry E. Rohlsen Airport in 2001 and 229,484 departed.
American has since the 1980s had the most flights and most seats serving the territory of any airline.

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