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When Airlines Go Bankrupt

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Class, this week we're studying Chapter 11. Focus on: the airline industry.

The double filings today by Northwest Airlines and Delta Air Lines were hardly any surprise to anyone. Ever since 9/11, the airline business has been seriously troubled -- though its troubles go back further, to the development of a business model that is really unsustainable: How do you keep selling goods (the cheap seats) far below the revenue needed to cover your overhead? You don't. You eventually file for bankruptcy protection.

The trouble is, it's not just troubling for the airlines. As more and more of them line up for bankruptcy court (US Airways and United Air Lines filed earlier), millions of people are going to be affected.

So what happens now? Now, we wonder which hubs could be eliminated, whether hard-won frequent flier miles will be honored, and what happens to the potential pools of laid-off workers as a result.

What do you plan to do?

Last updated: Sep 14, 2005




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