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Is there life after bankruptcy for airlines?
<http://cbs.marketwatch.com/news/default.asp?siteid=excite&dist=excite>
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By Mike Wilkening, Medill News Service
Last Update: 8:37 PM ET Aug 16, 2002
WASHINGTON (CBS.MW) -- Good news for troubled airlines: There is life
after bankruptcy.
Just look at Continental Airlines and America West.
Continental (
<http://money.excite.com/jsp/qt/full.jsp?symbol_search_text=CAL> CAL:
<http://money.excite.com/jsp/nw/newsheadlinebysymbol.jsp?symbol_search_t
ext=CAL> news) filed for bankruptcy in 1983 and again in 1991, but
emerged relatively strong as the nation's fifth biggest airline. America
West ( <http://money.excite.com/jsp/qt/full.jsp?symbol_search_text=AWA>
AWA:
<http://money.excite.com/jsp/nw/newsheadlinebysymbol.jsp?symbol_search_t
ext=AWA> news) also filed in 1991, as high fuel prices and empty seats
battered the industry, but it took flight from Chapter 11 in 1994.
Carriers that do the best job of cutting costs are the ones able to
escape from Chapter 11, said Ray Neidl, an analyst at Blaylock &
Partners. Those carriers also "had a good franchise to reorganize, as do
United and USAir," Neidl said. USAirways filed for Chapter 11 on Aug.
10, and United (
<http://money.excite.com/jsp/qt/full.jsp?symbol_search_text=UAL> UAL:
<http://money.excite.com/jsp/nw/newsheadlinebysymbol.jsp?symbol_search_t
ext=UAL> news) threatens to file this fall if unions don't help it cut
costs. See
<http://custom.marketwatch.com/custom/excite-com/news-story.asp?guid={A7
5C8CD5-0234-42B7-BE10-3E15D108883E}> related story: Emergency exit for
United.
The key to a successful Chapter 11 filing is to go in with a viable
reorganization plan, said Michael Boyd, an aviation consultant. Airlines
that simply run out of money, like Midway and Vanguard, he said, are
likely doomed. Midway filed last summer and is now an express carrier
for USAirways. Vanguard filed last month.
Boyd praised US Airways for having a clear idea of what it needed to
accomplish in bankruptcy.
"USAir has a plan," Boyd said. "They're basically out of the woods."
United, however, is suffering from "panic management," he said.
Bankruptcy isn't always so kind. TWA entered bankruptcy three times,
coming out the third time as part of American Airlines (
<http://money.excite.com/jsp/qt/full.jsp?symbol_search_text=AMR> AMR:
<http://money.excite.com/jsp/nw/newsheadlinebysymbol.jsp?symbol_search_t
ext=AMR> news). Eastern landed in Chapter 11 and never left the ground.
Aviation pioneer PanAm disappeared, though its name was resurrected
years later by a new airline.
Braniff filed three times for Chapter 11 before disappearing forever.
The only notice it gets these days is at the end of episodes of the
Comedy Channel's "South Park" show: An old Braniff commercial flashes
after the closing credits, saying "Braniff -- Believe It!"
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