Before the organisation became the market leader in aviation industry, Continental Airlines was forced to file for two bankruptcies prior to 1991. September 25, 1983 Continental Airlines, the nation's eighth largest passenger carrier with service to more than 70 U.S. cities, filed for reorganization under federal bankruptcy laws … A number of major airlines have declared bankruptcy and have either ceased operations, or reorganized under bankruptcy protection. That has created a competitive situation where the nimble survive, but where the wrong move can spell doom. View All. ; Los Angeles; Minneapolis-St. Paul; New Orleans; New York; Oklahoma City; Orlando; San Antonio; San Diego; San Francisco; Seattle-Tacoma; Tampa-St. Petersburg; Tulsa; Washington, and Wichita, Kan. Keep supporting great journalism by turning off your ad blocker. Expected steps by both bankrupt carriers to slash domestic flights and put smaller planes on some routes could help American Airlines and Continental Airlines by getting rid of excess … Continental, under pressure from new, low-fare, non-union airlines, claims that it has lost nearly $500 million since 1979 and that the bankruptcy decision was essential so it can reorganize under the protection of the bankruptcy laws. In late 1990, fuel prices were at a high point and passenger traffic was at a low point, due to effects of the Persian Gulf War. In 1936, Robert F. Six bought the airline and changed the name to Continental. Continental declared bankruptcy first in September, 1983, and again in 1990, emerging in 1993 after an investment by Air Canada along with Air Partners and Texas Pacific Group. Retrieved from, "List of Airline Bankruptcies Since Deregulation", "Airlines For America | U.S. Continental Airlines, the nation's eighth largest passenger carrier with service to more than 70 U.S. cities, filed for reorganization under federal bankruptcy laws last night, suspended its domestic flights and said it would reopen slimmed-down service to 25 U.S. cities Tuesday. The last solvent traditional large US airlines could be among the biggest beneficiaries from bankruptcy filings by Northwest Airlines and Delta Air Lines, analysts said on Wednesday. Airlines, Continental Airlines, Hawaiian Airlines, Northwest Airlines, Frontier Airlines, Jet Blue Airlines and Southwest Airlines, representing network carriers, regional carriers and LCCs respectively. Continental said that had it "been able to reduce its labor costs to 19 percent of its total operating expenses, it would have made $71.3 million in 1982 instead of losing, as it actually did, $135.5 million.". Transporte Aéreo Militar (TAM) was an airline based in La Paz, Bolivia, owned by the Bolivian Air Force and set up to serve rural communities. Terms of the Railway Labor Act, amended in 1936 to cover airlines, prevent most labor union work actions before, during and after an airline bankruptcy. In a statement released during a news conference at the airline's headquarters in Houston, Continental chairman and president Francisco Lorenzo said, "We intend implementing a strategic plan that can make Continental Airlines the largest of the low-cost airlines.". One major element in almost every airline bankruptcy is the rejection by the debtor of its current collective bargaining agreements with employees. After six months in a high-level operations position, Bethune won them over with a plan developed with Continental consultant … [1][2], This is a list of airlines that have filed for bankruptcy protection via Chapter 11 in the United States. And Pan American, after a major route and labor restructuring, is setting records on its international flights. ; Denver; Fort Lauderdale; Houston; Kansas City; Lafayette, La. In 1982, according to Continental papers, its labor costs were 33 percent of its operating budget. • Continental emerged in 1993 after an investment by Air Canada and the Texas Pacific Group. • carries approximately 50 million passengers a year to five continents (North and South America, Europe, Asia, and Australia), with over 2,300 daily … As such, we cannot verify the accuracy of each individual entry. The economic structure of the airline industry may contribute to airline bankruptcies as well. "We did everything possible today to minimize passenger inconvenience," Lorenzo said. (n.d.). The economic deregulation of the airlines was mandated by Congress in 1978, and rules have been lifted gradually. 8 of 10. After the first six months of this year, only four of the nation's top 10 carriers were showing a profit. Desktop notifications are on   | Turn off, Get breaking news alerts from The Washington Post. [2][4], National Florida Airlines - Sunshine Skies. • Continental was acquired by United Airlines in 2011. This is a timeline of airlines who have filed for bankruptcy protection. By the end of six months, the loss had been trimmed to $520 million, and analysts believe the industry as a whole will make money this year. Bethune had completed an Advanced Management Course at Harvard Business School and laid out a plan before the Board of Directors, but at first, the Board was reluctant to make him Chief. After satisfying certain requirements, bankruptcy law permits courts to approve rejection of labor contracts by the debtor-employer. The action came, Continental officials said, after its pilot and flight attendant unions declined a company proposal to reopen their contract and accept company stock in exchange for $150 million in cost concessions. That same year, Continental sold its Seattle-Tokyo route to Americ… This paper provides at least both long-term and short-terms analysis of the Continental Airlines bankruptcy in 1990, relying for the former on an analysis of the state of the American airlines industry in 1990 and for the short-term specific economic information relevant to Continental at the time. On the other hand, industry leaders United and American are strong this year. Also see list of defunct airlines for a list of airlines which are no longer operating. An unknown number of passengers were left holding Continental tickets at U.S. airports last night. In September 2019, the airline suspended all operations. Continental has been operating despite a strike by its mechanics since Aug. 13. Some analysts think there will be more bankruptcies or mergers to avoid bankruptcy as airlines adjust to deregulation and strive to recover from a recession that has given them three consecutive years of record losses. • It filed for bankruptcy a second time in 1990. Continental Airlines was a major United States airline founded in 1934 and eventually headquartered in Houston, Texas. Figures like that, Continental officials said, led to the airline's decision in August to continue operating during the mechanics strike. After World War II, Continental began to build up a route network extending from Houston to the West … It had ownership interests and brand partnerships with several carriers. Airlines, like any business, are susceptible to market fluctuations and economic difficulties. United Airlines and Continental Airlines agreed to merge in 2010, and Delta Air Lines bought Northwest three years ago. Continental, with a proud tradition particularly in the West, is a subsidiary of Texas Air Corp., which also owns New York Air. Veteran airline reporter Ted Reed writes at Forbes that now that we’ve reached the end of 2020, “American Bankruptcy Chatter Turned Out To Be Nonsense.”. In some other countries, including in Europe, an airline that can’t pay its debts often goes out of business, forever. Continental said it will again be serving the following cities beginning Tuesday: Austin; Baton Rouge; Burbank, Calif.; Chicago; Cleveland; Corpus Christi, Tex. Continental Airlines. Continental headed that list, but it also included Eastern, Trans World, Western and Republic. New airlines, such as People Express and Muse, have employed trim budgets and no unions to start service at cut-rate fares without so much as an if-you-please from the Civil Aeronautics Board. Retrieved from, Tejas Airlines: Where Did It Go? Continental once again declared bankruptcy in 1990, a year in which it lost a further $340 million. American Airlines (NYSE:AMR) is the last of all the major U.S. airlines to have filed for bankruptcy. The company traced its history to Varney Airlines, incorporated by Walter T. Varney in 1934. He said tickets will be honored for Tuesday flights to cities still on the Continental schedule. In 1986 Continental took over Frontier Airlines and began flying its routes. This is a list of airlines that have filed for bankruptcy protection via Chapter 7 in the United States. Neither DOT nor A4A maintains official records of airline bankruptcy filings and/or service cessations. • Headquarters :Houston, Texas, • Continental is currently the USA’s fifth largest airline and the seventh largest in the world. Retrieved from, Miami Air International files for Chapter 11 bankruptcy protection| Aeronewsx. In the last three years, the U.S. airline industry has posted losses of $221 million, $454 million and $733 million. Venerable airline brands with a commitment to quality, like Continental, were prime takeover targets. A Selection of Recent Airline Bankruptcies Braniff International May 13, 1982 Continental Airlines September 23, 1983 Eastern Airlines March 9, 1989 Pan American Airlines January 8, 1991 America West Airlines June 28, 1991 Trans World Airlines January 10, 2001 US Airways August 11, 2002; September 12, 2004 United Airlines December 9, 2002 Aloha Airlines December 30, … Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. Continental restructured the air carrier and participated in the air fare wars with the hopes of stabilizing the carrier and to turn a profit. Continental Airlines was a Texas based airline Headquartered in Houston, Texas that was founded in 1934 by Walter T. Varney as "Varney Speed Lines" Hauling Mail in West Texas. After Texas Air Chairman Frank Lorenzo (HBS 1963) secured Continental in his hostile takeover bid, tensions escalated between Lorenzo and the old guard--especially when Lorenzo declared Continental bankrupt in the fall of 1983 and then fired and replaced half his staff with … Also contributing was a series a mergers leaving Continental with other airlines’ debt in addition to their own. In the past two years, airlines have been able to decide where they will fly and what they will charge without checking first with Uncle Sam. In 1983, Continental filed bankruptcy with losses of ($218,000,000.). At Southwest Airlines, a competitor, the figure was 26.2 percent and at Muse Airlines, another regional competitor, 12 percent. Continental Airlines filed for protection from its creditors under bankruptcy laws yesterday, attributing the step to the jump in fuel prices … Meanwhile, Continental tickets will be accepted for standby travel on Republic and Southwest flights, company spokesmen said yesterday. In recent weeks, Eastern, Western, Republic and TWA have sought major salary concessions from their employes, or imposed them where they could. Its losses totaled $60.4 million in the first six months of this year, and company officials attributed the problems to high labor costs. Continental has struggled as visibly as any of the airlines. It filed for bankruptcy for the first time in September 1983 and remained under Chapter 11 from 1983 to 1986. Northwest Airlines has also remained in the black, and two once-small regional carriers--Washington-based USAir and Piedmont--are healthy and expanding. Cities to be served include Washington at both National and Dulles airports. Later it came under the control of Robert Forman Six (president 1938–82), who gave the airline the name Continental and, in the following decades, transformed the shoestring operation into one of the major American transportation companies, headquartered first in Denver and … Continental Airlines AP. By the end of 1984 Continental was able to turn a profit. Continental Airlines declared bankruptcy, chapter 11, a second time in December of 1990. The Air Line Pilots Association and the Union of Flight Attendants declined the offer Friday night, and refused to discuss it yesterday morning, company officials said. That was when the decision to seek protection under Chapter 11 of the bankruptcy law was taken by the Continental board. This was because Lorenzo spend a majority of his time focused on Eastern Airlines, and the 1990 Gulf War. Continental Airlines had been through Chapter 11 twice. In 1994, CEO of Continental Airlines, Gordan Bethune (Figure 3) successfully transformed the organisation from worst carrier to fifth-largest airlines (Klein 2002). — Civil Aviation Forum | Airliners.net. With this tool, airline managers reduce costs. Continental Airlines declared bankruptcy in 1983. Continental Airline History • Founded in 1934 with a single engine Lockheed aircraft. The significant change was initiated by the implementation … have filed for and come out of Chapter 11 bankruptcy are: US Airways, United Airlines, Delta Airlines, Northwest Airlines, and Continental Airlines, which recently merged with United Airlines on October 1, 2010 (72). Continental was purchased by Air Canada in 1992 and emerged from bankruptcy … Shortly after, Continental filed for bankruptcy for the second time in their history. The major overall economic element affected the entire American transportation … Continental said the "New Continental" that opens for business Tuesday will operate flights on about 40 percent of the present system but use only 35 percent of the present workforce. When Eastern airlines went into bankruptcy and was removed from the control of Texas Air, Texas Air was renamed Continental Airlines Holdings in 1990, to reflect its primary remaining air operation. But revenues did not pick up to extent desired, and last week Continental offered the rest of its employes up to 35 percent of the company's stock in exchange for $150 million in cost concessions. When Gordon Bethune assumed control in 1994, Continental Airlines had several black eyes and was on the verge of filing for bankruptcy a third time. Situated at 810 N Street #100, Nosek Law Group proudly offers legal services in the areas of transactional law. Or purchase a subscription for unlimited access to real news you can count on. But Eastern could not recover and was forced to liquidate in 1991. Terms of an employee contract negotiated over years can be eliminated in months through Chapter 11. The Biggest Airline Bankruptcies. Continental Airlines declared bankruptcy, chapter 11, a second time in December of 1990. Continental's international schedule, which includes flights to Mexico, South America and the South Pacific, will not be affected, the airline said. American Airlines • In 2011, AMR had a net loss of $471 million. Lakers Airways Skytrain: defunct 1982. Harris left Continental Holdings in 1991 and was replaced by former CFO Robert Ferguson. Continental Airlines was the first major Chapter 11 case in Delaware. Date: Carrier: Chapter: 10/8/2019: Via Airlines: 11: 1/19/2019: … Bankruptcies and Services Cessations", http://www.airliners.net/aviation-forums/general_aviation/read.main/5130319/, "Avianca, one of Latin America's largest airlines, files for bankruptcy", https://www.aeronewsx.com/post/miami-air-international-files-for-chapter-11-bankruptcy-protection, https://en.wikipedia.org/w/index.php?title=List_of_airline_bankruptcies_in_the_United_States&oldid=995942317, Short description is different from Wikidata, Creative Commons Attribution-ShareAlike License, Ceased operations; Most assets purchased by, Second filing, emerges in conjunction with its acquisition by, Second filing; ceased passenger operations, Emerged as subsidiary of Delta Air Lines; name changed to, This page was last edited on 23 December 2020, at 18:19. That leaves American Airlines as the only major US airline to avoid filing for bankruptcy in the past decade. In the first quarter of this year, the industrywide loss was a record $650 million (although the first quarter is almost always in the red). Delta had net earnings of $593 million; United earned $854 million. Seven bankruptcy filings during the period 2001-2012 will be taken into consideration in this study. The table is provided as a service rather than an authoritative source. Continental once again filed for protection under Chapter 11 of the federal bankruptcy code, joining fellow subsidiary Eastern. Five of the other six have been on the worry list for industry analysts. This $9 billion company successfully reorganized after (i) two years of litigation with aircraft lenders about (a) whether Bankruptcy Code Section 1110 covered sale leaseback debt requiring prompt contract payments on that debt and (b) adequate protection for liens on owned aircraft, and (ii) a contested plan … It is the only known source that is publicly available, free, and centralized. Delta, generally regarded as financially healthy, nonetheless lost $65 million in the first six months of this year. Continental Flight 382 out of Denver arrived at Dulles Airport last night, but its continuation to Baltimore was canceled. The Continental bankruptcy is the second involving a major airline since Congress deregulated the industry in 1978. Continental has about 12,000 employes concentrated in Houston, Denver and Los Angeles. He points out that their stock has fallen more than most other airlines, but they’ve avoided bankruptcy, and chalks up chatter about the risk of Chapter 11 to Boeing’s CEO publicly stating one U.S. carrier would … Date: 12/3/90 Assets: $7.7 billion. Terms of the Railway Labor Act, amended in 1936 to cover airlines, prevent most labor union work actions before, during and after an airline bankruptcy. Here is a look at some of the largest airline bankruptcies, including archival information from The New York Times. The Continental name was retained when it was merged in 1982 with another Texas Air subsidiary, Texas International. United capitalized on … Jan Carlzon, chairman of Scandinavian Airlines System, which now owns 16.8 percent of Continental stock, also opposes filing for bankruptcy, the lawyer said, because the value of S.A.S. Founded by Sir Freddie Laker in 1966, the airline and … AMR …