close window 
On September 14, not one but two U.S. airlines filed for Chapter 11 protection. That day, Delta and Northwest became the third and fourth airlines whose financial woes were so severe they needed to file for bankruptcy.
The Chicago Tribune interviewed economists and corporate restructuring experts about what’s going on in the industry for page one of the business section. Sam Peltzman, Ralph and Dorothy Keller Distinguished Service Professor Emeritus of Economics, and James Schrager, clinical professor of entrepreneurship and strategic management were both quoted.
Peltzman echoed what most people are thinking. “The whole industry needs to get smaller.” he said. He pointed to bankruptcy laws that sometimes stretch out the process as a problem.
Schrager provided additional perspective on the bankruptcy situation. He noted the process is driven by “the government’s interest in keeping people employed” and “laws that favor companies that can come up with outside funding.”
According to the article though, it’s tough to determine who should bear the brunt of the blame for the airlines plight—the courts, the government, or capital markets. What’s not in question, Peltzman said, is who will lose. Discussing the current state of the industry with low fares and lots of flights, he acknowledged “that can’t last. Everybody who doesn’t have a flight available to them in the future will be worse off.”
The story was picked up by the Corvallis (OR) Gazette-Times and the Calgary Herald.
The original article, “Little turnaround room in bankruptcy hangar,” in the Chicago Tribune on September 15.