So why is he still at the helm?
No idea. In July, 2010, the board promoted Horton to President, and I thought that was the signal that Arpey was done. But here we are in late 2011 and Arpey is still Chairman and CEO. Perhaps Arpey sold the board a bill of goods on the prospect that the other airlines' costs would eventually converge to equal or exceed AA's costs. Remember all the press about the billion dollars of new 3rd party revenue and the hundreds of millions of dollars of cost savings at the bases? I posted here at the time that I doubted those figures ever materialized. I think it was exaggeration. Perhaps Arpey and the board think that the market would "reward" AA for not abandoning its debts and obligations in Ch 11. Who knows?
While most of the changes to bankruptcy law in October 2005 were intended to extract more repayment from the consumer class (re: Chapter 13 or Chapter 7), nobody really knows what will take place in a business Chapter 11 filing. Before the change, the corporation got what they wanted, big bonuses all around for the ties, and a grand hosing with no grease for the workers. No body has really been able to tell me what might occur now. The rules did change but - how much and how much more latitude the BK judge may avail him/herself of is still up in the air.
Things may not be that much different but I do believe the changes derailed many corporate plans to dump obligations though the BK code. Once upon a time, news of a new corporate filing was commonplace - now, not so often. Why?
Perhaps our resident attorney could assist here.
I've said it before - nearly every airline with a cost problem (except for AA) filed prior to Oct, 2005, and thus didn't need another bankruptcy. Filing Ch 11 isn't like getting the car washed. It's expensive. And once you do it (or the second time if you're CO or US) if you did it right, you don't have much to gain by doing it again. The universe of potential airline filiers is so small that I don't see the decline in airline bankruptcies as indicating much of anything.
I disagree that there's been a dearth of corporate bankruptcies since the law was amended. GM and Chrysler filed in 2009 and are still in business. And they offloaded a lot of obligations. Tribune Company (Chicago Trib, LA Times, Chi Cubs, etc) filed late in 2008. Frank McCourt (spawn of the Devil himself) threw the Dodgers into Ch 11 earlier this year.
Frontier Airlines filed Ch 11 in early 2008 when its credit card holdbacks hit 50%, starving it of operating cash. It ended up acquired by Republic.
Others include Blockbuster, Borders, A&P, American Media (National Enquirer), Denver Post/San Jose Mercury News, WaMu, Lehman Bros, Sharper Image and others. Not all of them survived (or will survive). Of the non-survivors, their liquidation may be due to the 2005 changes in BK law. Maybe some of the businesses were dinosaurs and no longer viable no matter what was discharged in BK. Here's an article where a Skadden, Arps BK partner hints at the possibility that the 2005 changs might have played a part:
http://www.nytimes.com/2008/04/15/business/15retail.html?pagewanted=all
According to the US bankruptcy courts (I can't imagine an incentive for them to lie about the numbers of filings), total business filings declined slowly from 2001-07 (not surprising given the relative strength of the overall economy until the 2008 meltdown) but then exploded in 2007-08. Here's the source, with a graph depicting total business and individual filings:
http://www.uscourts.gov/news/TheThirdBranch/10-11-01/Business_Bankruptcies_Stabilize_in_2010.aspx
IMO, the 2005 changes that applied to business filings were cosmetic and not all that meaningful. They were a reaction to the outrageous odyssey that was the UAL bankruptcy that went on for more than three years. But like most of what Congress does, it made for good soundbites on the news but didn't have all that much real impact. GM and Chrysler filed and emerged intact but smaller. Perhaps the 2005 changes have made execs try a little harder to fix their companies' problems outside Ch 11. That's probably good news for everyone except high-priced bankruptcy lawyers and related parasites (investment bankers, accountants, consultants, etc).
