Home > Article > Is Bankruptcy ‘Business As Usual’ For Airline Industry? : NPR

Is Bankruptcy ‘Business As Usual’ For Airline Industry? : NPR

English: DFW American Airlines Departure

As American Airlines struggled to keep up with its rivals in recent years, it could at least boast something that competitors could not: The Fort Worth, Texas-based carrier had never gone bankrupt. Not anymore.

On Tuesday, American‘s parent, AMR Corp., filed for bankruptcy protection, citing $10 billion in loses over the past decade. In a statement, it said it took the step in hopes of bringing down costs and emerging more competitive.

You might say it’s almost business as usual for the airline industry. United, Northwest and Delta have all taxied down the Chapter 11 tarmac. US Airways did it twice in as many years.

But David Arthur Skeel, a professor at the University of Pennsylvania Law School and an expert in corporate bankruptcy, remembers that things were different 20 years ago, when Eastern Airlines and Pan Am went belly up.

“If you contacted a travel agent, they would ask you if you were willing to fly on a bankrupt airline,” he said. “They don’t ask that anymore.”

Fading Stigma?

Skeel said it illustrates not only how commonplace airline bankruptcies have become, but also how the stigma of bankruptcy itself has all but disappeared. To be sure, Eastern Airlines and Pan Am ultimately liquidated; all the major airlines struggling today went through Chapter 11, allowing them to keep flying while they restructured debt and operations.

via Is Bankruptcy ‘Business As Usual’ For Airline Industry? : NPR.

Strange Random Airlines Quote:

This is a nasty, rotten business. — Robert L. Crandall, CEO & President of American Airlines.

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