PG: Most people don’t realize that American Airlines has a relatively low market cap of about $600 million and the valuation of the frequent-flier program is actually worth more than the airline when you take a look at it. When Delta Air Lines was in bankruptcy, their largest creditor, their largest debt possession financier, was American Express because they had co-branded their frequent-flier program with the American Express card. It was in American Express’ best interest to keep Delta. American has that relationship with Citibank.

TM: In the past two years, American forward sold about a billion miles to Citibank. There are a lot of people who want American Airlines to succeed. At the end of 2010, American had 67 million advantage members.

In the last decade Delta, Northwest, United and US Airways, all filed for bankruptcy. It was tremendously disruptive for the people involved with the airlines––the people who loaned it money, gave it credit, operated it, employed by it. But for the flying public, it was business as usual. Your frequent-flier miles were honored, your tickets were honored and you flew the next day.

PG: And that’s whats going to happen with American Airlines.

TM: The impact on consumers, if it happens, will happen father down the road. There is some debate on how much American Airlines will shrink as a result of this. But we wont see signs of shrinking until sometime in 2012. Maybe late in 2012.

PG: My prediction is that American Airlines is going to shrink by dumping American Eagle. They’re going to remove their low-yield routes, reallocate aircrafts and you’ll find yourself on planes that are even more full.

TM: Mike Boyd put out a report that estimates that of American Eagle’s 299 airplanes that are now flying, maybe 100 will go away. Because of high fuel prices, it is no longer economical to fly such small planes.

What do you think is to come for American Airlines? Sound off in the comments below.

For more information on American Airlines, check out:

• Peter’s Travel Detective blog on American Airlines’ Bankruptcy, Mileage Programs & Industry Changes
• Peter and Terry Maxon question if Fliers Will Feel the Pinch As American Airlines Loses, Money, Pilots and Capacity
• Peter’s CBS News Report on American Airlines Announcing the Largest Order in Aviation History

By Peter Greenberg for Peter Greenberg Worldwide Radio