American Airlines in a storm

The Miami Herald: There’s no way to put a smiley face on the decision by American Airlines to file for bankruptcy protection. With more than 9,000 employees, American has one of South Florida’s biggest payrolls, and it was headed for a fourth straight year of major losses, probably exceeding $1 billion by the end of 2011.

Oddly, the bankruptcy filing comes almost exactly 20 years after the day — December 4, 1991 — when Pan Am was forced to shut down, putting an end to an airline whose proud history was inextricably tied to South Florida from the moment it was founded in 1927 and pioneered international flights by carrying the mail from Key West to Havana.

But this doesn’t call for panic. American is not Pan Am. Nor is it Eastern Airlines, the Miami-headquartered airline that stopped flying in January 1991 after a long and painful effort to survive.

American’s situation is significantly different. In filing for Chapter 11 protection, American is not declaring that it does not have the structural resources or sufficient routes to achieve success, or that its financial position is hopeless. (It has about $4.1 billion in cash and short-term investments on hand.)

Rather, it is facing up to the near impossibility of competing with other airlines while it deals with the cost structure of so-called legacy carriers.