What We Can Learn From American Airlines’ Chapter 11

Because of the unions, American Airlines needed to file a Chapter 11 bankruptcy in order to reduce labor costs and shed secured debt and leases no longer financially viable. Finally AA, you get it, there is no way you could continue as a profitable business with out performing this extreme workout. Now, you will be able to shed excess overhead, restructure and remove excess debt, and become profitable directly. Nice decision! It took too long but you finally did it.

Note that Delta and United already went through this exercise years ago and have been profitable ever since. AA held on, losing massive amounts of money, and now will begin to emerge profitable once again. What can small business owners learn from this?

Do your workout now. Do not wait! There is no advantage or benefit gained from waiting.

All that results from waiting is more money being lost and your business becoming weaker, nothing else. Fortunately, small business owners do not have to file for bankruptcy protection to implement their workouts. They can do workouts safely and with far less risk of being liquidated by doing a simple workout strategy the likes of which we engineer every day for many businesses.

The point is that a workout is not a sign of giving up, nor should it be considered a defeat or failure, quite the opposite is true. A workout is a strategy to succeed, to make adjustments required so success can be assured going forward. It is the best and only way to succeed in the current economy as the debt load and overhead is too high for so many businesses to survive. Success can only be attained by removing these burdens and a workout accomplishes this. It is a most honorable and appropriate strategy.

Learn from American Airlines and do the workout now, do not wait. Relief is available so you may survive, emerge and succeed.