Comment by nunez
3 months ago
The more interesting question is why airlines go bankrupt in such spectacular fashion.
Every airline that goes belly up always does it with a bang. All flights cancelled, effective immediately. Stranded customers. Tens of thousands of jobs instantly lost. Every time.
It's not like startups or even established companies wherein the time of death takes forever to get to, despite EVERYONE knowing that the body is a corpse.
It's as hilarious as it is depressing.
Often airlines engage in merger rather than collapse. See US Airways (bankrupt) + America West, and later American Airlines (bankrupt) + US Airways.
I think the bankruptcy process does tend to lead toward spectacular failure when the cost of operating is too far above the revenue from operating. Decreasing operations during bankruptcy makes the company less attractive and may not even significantly help the net revenue situation. You really need to be solvent or nearly solvent to have an orderly winding down. That said, wikipedia says they did reduce scheduled flights by 25% in Nov 2025, and I think they reducsd the size of their fleet in a similar time frame, so it could have been that much more confusion and delay.
On the other hand, Spirit as mentioned in the article stopped making profit in 2019. Some years later, chapter 11 filings and then another round.. That's like a 7-year runway (pun intended) to insolvency.
Because fixed costs are what they are, I think, is the reason you can drive the business quite precisely to the brink of inoperation: it could literally come down to pure luck between how full your planes happen to be and how close you are to the next payment of some critical loan whether you can take off into the air for another month or so.