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American Cruise Line:
How the American Hawaii Cruise Line Bankruptcy Happened
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American Cruise Line shut its doors and docked its ships in October 2001, leaving thousands of Hawaii-bound vacationers stranded high and dry without reciprocation or the possibility of a refund?
How did it happen? Why did this cruise line fall?
To learn more about American Cruise Line and their eventual demise as the only U.S.-flagged cruise ship operator in the world, keep reading.
Blaming it on September 11
When American Cruise Line first released news of their bankruptcy filing, the company claimed that the tragic events of September 11 resulted in a dramatic drop in bookings and a devastating blow to their business.
The cruise line claimed that in the four weeks following the terrorist attacks, their bookings dropped by 50 percent and they saw cancellations increase by 30 percent.
And while this sudden drop in revenue would hurt any cruise line, it annihilated one that was already crippled and suffering.
The American Cruise Line Downfall – Overextension
The truth is American Cruise Line had overextended itself after commissioning two new, U.S.-built ships (to the tune of close to $200 million) and purchasing and outfitting another foreign vessel for $142 million.
The company was in massive debt and had spent the last year hacking staff ratios, overbooking its ships, cutting on-shore staff and axing on-board entertainment programs.
Travelers were complaining, bookings were falling and American Cruise Line was bleeding money long before the tragic events of September 11.
The Impact of the American Cruise Bankruptcy Debacle
As a result of American’s filing for Chapter 11 bankruptcy, 2100 employees lost their jobs and thousands of travelers who had prepaid for their cruise were left without financial recourse or options.
The company did not give refunds, but instead directed customers to their travel insurance, travel agents or to seek refunds through their individual credit card companies.
This was bad news for travelers who paid with cash or personal check. They wound up in line with and just as unpaid as American Cruise’s other creditors.
How to Stop Bankruptcies from Affecting Your Next Cruise
Your best defense against a debacle like the American Cruise Line’s bankruptcy is to purchase all your travel arrangements with a credit card. Under the fair-credit laws, you can’t be charged if you never received the merchandise.
Other tips for protecting yourself against a potential bankruptcy is to not pay for trips too far ahead, you want to be able to assess a company’s financial future before you buy.
Next, think about purchasing trip insurance, but make sure the policy includes company defaults. Finally, buy from companies that you trust.
While the American Cruise Line bankruptcy filing was disheartening for many travelers, it continues to serve as a warning for future vacationers - either book with a credit card or purchase travel insurance.
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Travel-Cruise-Adventures.com :: American Cruise Line