U.S. Airlines Don’t Need a Bailout to Stay in Business

0

Professor Richard Squire, who teaches corporate bankruptcy law, shares his expert opinion in an op-ed for The Washington Post on the evolving situation with the airline industry and possible bailouts.

Yet there is no danger that the airlines are about to disappear, leaving the flying public grounded after the coronavirus crisis passes. Without a bailout, the air carriers would renegotiate their terms of credit with their lenders outside court, or they would file for Chapter 11 bankruptcy protection. Either way, they would keep flying.

Bailout-seeking companies typically portray bankruptcy as tantamount to corporate death. The business is shut down, the employees are all fired, and the assets are sold off for scrap. The airline industry’s own recent history tells a different story. Between 2002 and 2011, AmericanDeltaFrontier, Northwest, United and US Airways all filed for Chapter 11. All kept flying throughout, and all emerged intact. (Some have since consolidated by merger.) Most of their customers didn’t even notice.

Read the full article.

Share.

Comments are closed.