Global: American Airlines Case Essay

Submitted By 2prinsess
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Accounting Paper
“The Epic Downfall To American airlines”
American Airlines is a prestigious airline that started out only accompanies first American Airlines began trading on the New York Stock Exchange on June 10, 1939.In 1942, American entered the airline catering business with a subsidiary called Sky Chefs, providing food service to its passengers as well as to other airlines. American Airways was developed from a conglomeration of 82 small airlines from 1930-1932. American Airways was a common brand by a number of independent carriers. The different airlines included Southern Air Transport in Texas, Southern Air Fast Express (SAFE) in the western US, Universal Aviation in the Midwest (which operated a transcontinental air/rail route in 1929), Thompson Aeronautical Services (which operated a Detroit-Cleveland route beginning in 1929) and Colonial Air Transport in the Northeast. Like many early carriers, American earned its keep carrying US Mail.
In 1934 American Airways Company had been transferred over to E.L. Cord, who renamed it "American Air Lines". Cord hired Texas businessman C.R. (Cyrus Rowlett) Smith to run the company. American Airlines was the first to cooperate with Fiorello LaGuardia to build an airport in New York City and became owner of the world's first airline lounge at the new LaGuardia Airport (LGA), which was known as the Admirals Club. Membership was initially by invitation only. This created a big suit for the airline and decades later changed the club into a paid club, creating the model for other airline lounges.
After 2001 American Airlines had to do a lot of reconstruction for the business to get more sales and recognition. Later on in both 2010 and 2011 their liabilities outweigh their assets. Ivestopedia deformed assets as "A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit." Ivestopedia also defined liability "A company's legal debts or obligations that arise during the course of business operations. Liabilities are settled over time through the transfer of economic benefits including money, goods or services." A company's assets should be equal to or greater there liabilities and owners’ equity. In American Airlines case it was the opposite for them. This downfall is what caused then to fall behind on more bills. Into thousand 11 they reported on their balance sheet that their total assets were 23 billion 848 million and that's total liability they reported it at 30,959,000,000. That statement alone set them back almost $7 billion dollars and numbers continued to grow. While reviewing the balance sheet from 2008 2012 all five of the year the total equity which is the total assets and total liabilities where always in the negative; and the number continued to grow. It is clear why America airlines had to file bankruptcy but it's not clear what they plan to merge into. “The Chapter 11
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