Fascinating LA Times article about American’s AAirpass

@Dan: Wouldn't this be a tricky contract to cancel in bankruptcy? The AAirpass holders are not creditors. Certain executory contracts (i.e. contracts where both parties have ongoing duties to perform) may be cancelled, but that is dependent on state law, and it is unclear whether AAirpass holders have any ongoing duties here. @Chin: If AA went bankrupt in Chapter 7, you wouldn't get anything back. Not a dime. I was sad when that one guy said he was tired of flying. Made me wonder if Lucky will ever get tired. I guess it's harder to be bored if you are flying a variety of airlines, as opposed to being stuck with AA/OneWorld.

The price seems ok to me. However, what if AA bankrupt, not chapter 11 but chapter 7? How much money can you get back?

From a legal perspective, AA can cancel a large majority of its contract in bankruptcy court. They should not have a problem cancelling some of these passes, and not others, as normally in chapter 11 you are allowed to keep contracts that are beneficial to you and annul the other ones (although you may have to pay compensation). If AA is purchased out of bankruptcy (like Chrysler), I suspect the acquiring airline would demand these passes all be cancelled. If the purchasing airline is willing to pay more for AA without these contractual liabilities, the bankruptcy court will almost certainly discharge the contracts.

I find the greatest fault with AA's executives and lawyers who wrote and approved the contracts. The early contracts did not forbid double booking, getting reimbursed by a companion, etc. While some pax's behavior did not set the highest ethical standards, they were maximizing their benefits and did not violate the contract. OTOH, AA's attempts to bribe witnesses were certainly unethical and possibly illegal. Contrary to many here, I don't think the passes were a good deal. You don't know how a company and its competition will evolve, and I wouldn't want to get married to a company. I like AA a lot, but again not knowing the future prefer to renew the relationship year by year. From their approach to the status granted, they feel the same way.

Allen - adding to your comment - back in the days when airlines did not routinely check ID, AA policy (dictated from the top - Robert Crandall) was to tell customers they were committing fraud and confiscate their ticket if they attempted to fly under someone else's name. Against the rules, yes. Fraud - very likely not, and a very costly policy (I know folks who refused to fly AA for many years after being so accused).