ABSTRACT
Airline bankruptcy, or the risk of bankruptcy, has become more likely with increasing airline privatisation. Bankruptcy or the liquidation of an airline clearly involves laying off staff and the stranding of passengers who have completed only one leg of a multi-sector trip. The United State (US) Bankruptcy Code gives companies in Chapter 11 relief from creditors, which includes the deferment of principal and interest payments on lending. This would normally cover payments to operating lessors and those extending certain types of lending secured on aircraft. Airlines for America list on its website all US airlines that went bankrupt since deregulation in 1978. At the end of 2004, there were six Latin American airlines close to bankruptcy: Aerolineas Argentinas, VASP and Varig in Brazil, Avianca and Intercontinental in Colombia, and Nuevo Continente in Peru. In Australia, the long-established airline, Ansett was placed in voluntary administration by its owners on 12 September 2001, and finally ceased operating in March 2002.
