NEW YORK (CNN/Money) -
An airline going bankrupt? Oh. My. God.
No, if United Airlines does file for bankruptcy, it certainly won't be the first -- the Chapter 11 habit has been one of the hallmarks of the airline business over the past 20 years. And if past is prelude, don't be surprised to hear from United again. (See more on United's struggles.)
|†Source:††Credit Suisse First Boston|
Since 1982 there have been 18 airline bankruptcies. Which isn't the same thing, it turns out, as saying that 18 airlines have gone bankrupt.
Serial offenders abound. Braniff (remember that one?) filed for Chapter 11 in 1982, came out of bankruptcy, and then filed again in 1989. Continental went bankrupt in 1983 and 1990. Midway (no longer public, but still flying), filed in 1991 and again last year. TWA went bankrupt three times, in 1992, 1995 and last year, before it got taken over by American.
The Freddy Kruegeresque ability of airlines to keep coming back has hardly been a boon for investors. First, when a company goes bankrupt, shareholders lose their entire stake, regardless of whether it reemerges.
Second, the big problem for the airline business is there's too much capacity -- too many companies, too many airplanes -- an unwieldy, hub-based structure that makes less and less sense. Companies folding their wings, spending some time in the chrysalis of Chapter 11, and then returning, doesn't solve that.