For the answer, look no further than two disturbing developments this week, namely the repeat bankruptcy filings of ATA and Aloha Airgroup Inc., both only two years removed from their previous Chapter 11 reorganizations. And now Alitalia-Linee Aeree Italiane SpA says it may file for bankruptcy now that a suitor has bailed. While it's likely that larger U.S. carriers such as Delta Air Lines Inc. and Northwest Airlines Corp., fresh out of bankruptcy themselves and reportedly in talks to merge, can avoid slipping back into court protection, smaller carriers seem to be increasingly vulnerable.
And bankruptcy courts are certainly less forgiving of repeat offenders. On Monday, a bankruptcy judge refused to block Aloha from ceasing service, causing the debtor to begin to wind down its passenger business. ATA, too, seems to have abandoned all hope to continue as a going concern.
"ATA does not seek Chapter 11 protection for the second time lightly," chief restructuring officer Steven Turoff said in an affidavit filed with the U.S. Bankruptcy Court for the Southern District of Indiana in Indianapolis. "ATA had hoped that last-ditch financing could be obtained post-filing, but that does not seem possible." - John Blakeley
See story about Aloha's bankruptcy from TheDeal.com
See story about ATA's bankruptcy from TheDeal.com
See prior ATA bankruptcy filing profile from The Deal's Bankruptcy Insider
See Dealwatch: Airlines
Could ATA Airlines Inc.'s Chapter 11 filing late Wednesday portend a second round of bankruptcies for other airlines? The immediate future certainly doesn't look good. Record-breaking fuel costs are already hurting the industry, and the only things keeping the really big carriers from a crash landing is their huge cash hoards and the surprisingly resilient demand for seats. But how long can both last?
