Expert: David A. NewMyer - 9/15/2004

Question
i am an aircraft mechanic for expressjet airlines (continental express) and some of us were wondering if there was a limit to how many times U.S. Air can file bankruptcy...and if you don't know, do you know who to ask?

Answer
Hi, Michael:

There is no limit per se.  The limit has to do with how much the creditors of the company are willing to put up with in terms of the money that they are owed by the company filing chapter 11.  Also, there is a limit in the sense that the judge has to decide whether or not the filing of Ch 11 is a frivolous us of the law or if it is really needed.  The creditors have their chance in court to say what they think, and, if they are against the reorganization or if they have suggestions in terms of the terms that the judge places on reorganization, the judge may listen to them and put them into place.  That is, are there good reasons for the filing as expressed by the airline?  These good reasons have to do with unexpected or unavoidable issues that come up such as increasing fuel costs, or the 9-11 attacks, or a war, or some other event.  Also, the protection of a company such as USAirways, while it has its limits, is something many judges will try to do IF they see some effort on the part of the company to change it's ways and manage themselves (and their costs and revenues!) better than they have in the past.  Keep in mind that, among larger airline companies, Continental, America West and, now, USAirways have all filed twice and, so far, have all survived doing so.  

What I hear on USAirways is that, if they do not get the labor concessions that they need to emerge from Ch 11 by next year, then, they may well liquidate after mid to late March 2005.  So, watch the news on them.

I hope that this response is of assistance to you.

Sincerely,

David A. NewMyer, Ph.D., Professor and Chair
Aviation Management and Flight
Southern Illinois University Carbondale
http://www.aviation.siu.edu