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Do Accidents = Bankruptcy?  
User currently offlinePilotchris From United States of America, joined Mar 2004, 2 posts, RR: 0
Posted (10 years 6 months 6 days 6 hours ago) and read 2336 times:

Good day, folks. I’m about to start my master’s thesis on the correlation between major airline accidents and post-accident market share and profitability. Specifically, I’m researching airlines that have suffered major accidents to see if there is a link between the bad press and public uncertainty, and the eventual demise of the carrier. A good example would be ValuJet’s inability to recover following the crash of Flight 592.

If anyone would like to share their thoughts on this subject, or if you can provide other examples of airlines that’ve collapsed in the wake of a major accident, I would be extraordinarily grateful.

Thanks for your time.
Chris


12 replies: All unread, jump to last
 
User currently offlineMSYtristar From United States of America, joined Aug 2005, 6570 posts, RR: 50
Reply 1, posted (10 years 6 months 6 days 6 hours ago) and read 2280 times:

A classic example:

Pan American World Airways was beginning to turn things around in late 1987/early 1988. Its flagship 747 fleet was undergoing a massive refurbishment program, and bookings were up all across the route system. There was talk of a small profit by the end of 1988.

That all changed with the bombing of flight 103 in December of 1988. Bookings dropped like a rock system wise. All the progress the comapny had made went down the drain. Some say that the tragic end of flight 103 was what ultimetely put Pan Am under. Of course, years and years of mismanagement took its toll on the one proud airline. 103 was the final turn in the screw so to speak.

A sad end to such a great airline.


Steve/MSY


User currently offlineYanksn4 From United States of America, joined Dec 2003, 1404 posts, RR: 11
Reply 2, posted (10 years 6 months 6 days 6 hours ago) and read 2279 times:

I would have to yes, I mean just look at the two biggest examples: Pan Am and TWa. After Lockerbie, Pan Am was devastated and everyone i guess feared flying them. Same thing with Twa after the crash off long island


2013 Airports: EWR, JFK, LGA, LIS, AGP, DEN, GIG, RGN, BKK, LHR, FRA, LAX, SYD, PER, MEL, MCO, MIA, PEK, IAH
User currently offlineHenpol747 From Mexico, joined Jun 2001, 588 posts, RR: 1
Reply 3, posted (10 years 6 months 6 days 6 hours ago) and read 2258 times:

Couldn´t agree more with you guys. Some examples? Taesa, ValueJet, PanAm, Twa, Swissair.
Nevertheless, Air France, Singapore, Korean Air, Japan Airlines, and many others have had major mishaps and are still doing fine!!



Vive la France! ¡Viva México!
User currently offlineN754pr From , joined Dec 1969, posts, RR:
Reply 4, posted (10 years 6 months 6 days 6 hours ago) and read 2221 times:

If you have badly run airline like TWA and PAN AM the answer is YES.

Airlines like Korean Air and China Airlines have crashed more planes then I can name but they are doing great! What about SQ, they had a major crash and various minor accidents but they are also doing fine, so the answer is NO.


User currently offlineSEAPete From United States of America, joined Mar 2004, 67 posts, RR: 0
Reply 5, posted (10 years 6 months 6 days 6 hours ago) and read 2206 times:

I think you can cite many examples on either side of the argument. I suspect that what you will find if you were to examine the financials of those airlines that survived and those that didn't you will find that those that didn't survive were in much worse financial shape that those that did. A good airline that is well managed expects a crash will eventually happen and will have funds to cover their liability, but if they are operating on a very thin margin, as airlines often do even in the best of times, then the expected loss of revenue from a drop in market share combined with not having the funds available to cover liability incurred from the crash.

Consider two examples. Valuejet was in scary financial condition and got shut down by the government which lead it to fold and re-incarnate as Air Tran. Alaska had a crash in 2000 which created a lot of government scrutiny and remains strong to this day and has had a growth cycle during the last couple of years.

Cheers!

Pete



SEA No other place like it
User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 6 months 6 days 6 hours ago) and read 2200 times:

Valujet never went into bankruptcy, they were on the brink a few times as a result of 592, but never filed for bankruptcy. The merger with AirTran was just to get away from the image the Valujet name had taken on as a result of the crash.

User currently offlineMia777 From United States of America, joined Sep 2002, 1165 posts, RR: 6
Reply 7, posted (10 years 6 months 6 days 6 hours ago) and read 2167 times:

I think another good example would be Fine Air of Miami. This is one of the more unfortunate coincidences of aviation. The day (maybe the day after) the company went public there was that awful crash after the plane was improperly loaded and it collided with a building on the airport's perimeter and the pilots and some bystanders died. From then on, they obviously went into a financial downspin and then merged with Arrow Air of Miami and now they are in bankruptcy as well...


MIA777
User currently offlineJetjack74 From United States of America, joined Jul 2003, 7410 posts, RR: 50
Reply 8, posted (10 years 6 months 6 days 5 hours ago) and read 2116 times:
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Also, Air Florida practically shut down after Palm 90 crashed in the Patomic River


Made from jets!
User currently offlineCactus739 From United States of America, joined Jan 2004, 2448 posts, RR: 30
Reply 9, posted (10 years 6 months 6 days 5 hours ago) and read 2119 times:

I'd have to say no... accidents do not equal bankruptcy.... US Air (US Airways) had 5 crashes:

September 1989 - LaGuardia
February 1991 - Los Angeles
March 1992 - LaGuardia
July 1994 - Charlotte
September 1994 - Pittsburgh

They had all those crashes (2 just two months apart) and didn't file Chapter 11 until 2002...



You can't fix stupid.... - Ron White
User currently offlineMSYtristar From United States of America, joined Aug 2005, 6570 posts, RR: 50
Reply 10, posted (10 years 6 months 6 days 5 hours ago) and read 2110 times:

L'Express, a regional carrier which flew Beech 1900's in Alabama, Louisiana, and Texas during the late 80's/early 90's. One of their 1900's went down while enroute from MOB to BHM. The airline never recovered from that. I have a picture of one of their purple, green, and gold aircraft hanging up in my room actually.


Steve/MSY


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7410 posts, RR: 50
Reply 11, posted (10 years 6 months 6 days 5 hours ago) and read 2092 times:
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I think that it may have to do with the size of the carrier, the financial backing of the airline. If you were working for an airline on it's last legs, that an accident would not help the situation.


Made from jets!
User currently offlineClassicLover From Ireland, joined Mar 2004, 4636 posts, RR: 23
Reply 12, posted (10 years 6 months 6 days 5 hours ago) and read 2062 times:

As someone's already mentioned - Air Florida flight 90.

I read that the accident was supposed to have cost Air Florida 100,000 reservations - probably because it was highly publicised at the time. The airline went under in 1984.

It wasn't the only reason they went under, but it didn't help...

Cheers,

Trent.



I do quite enjoy a spot of flying - more so when it's not in Economy!
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