How Bankruptcy Helps Smaller Airline Industry

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Smaller Airline Industry Created after Bankruptcy and Job Losses

In the past 10 years, the U.S. airline industry has lost a huge amount of revenues, to the tune of tens of billions of dollars and more than 170,000 jobs. All of this can be attributed to lost revenue and bankruptcy filings. The result of this has been downsizing of the industry significantly. Most major airline carriers have seen this doomsday scenario.

According to Los Angeles based law firm Recovery Law Group, there are numerous examples of the same. The United Airlines underwent bankruptcy through chapter 11 in 2002-2006 had been reduced to half its size than it was in 1999. The airline which employed around 100,000 employees in 1999 cut down and now employs 46,538 people only.

In 2008, Delta Airlines and Northwest merged after filing through bankruptcy under chapter 11. Just like United Airlines, it also underwent similar job losses. The combined workforce of both companies was 80,000 by the end of 2009 which was a 37% decrease from the number of employees in 1999 before the companies had merged.

However, the shrinking of companies and their merger due to bankruptcy is not necessarily a bad thing. During boom time, many companies undergo massive expansion which cannot be sustained during periods of recession, which unfortunately are bound to happen. Such fluctuations are pretty common in various industries with airlines particularly vulnerable to them.

Filing for bankruptcy is one of the best tools to take care of the ever-increasing mountain of debt and unmanageable contracts of workers. Bankruptcy has come to the aid of various major airlines and kept them viable during times of recession. All airline carriers who have filed for bankruptcy under chapter 11 have not only reduced their debts but also their workforce, thereby surviving the recession and remaining viable in the long term.