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Airline Bankruptcy

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Airline Bankruptcy
Claremont Colleges

Scholarship @ Claremont
CMC Senior Theses CMC Student Scholarship

2010

Airline Bankruptcy: The Determining Factors Leading to an Airline's Decline
Jason Tolkin
Claremont McKenna College

Recommended Citation
Tolkin, Jason, "Airline Bankruptcy: The Determining Factors Leading to an Airline's Decline" (2010). CMC Senior Theses. Paper 88. http://scholarship.claremont.edu/cmc_theses/88

This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact scholarship@cuc.claremont.edu.

CLAREMONT McKENNA COLLEGE AIRLINE BANKRUPTCY: THE DETERMINING FACTORS LEADING TO AN AIRLINE’S DECLINE

SUBMITTED TO PROFESSOR MARCOS MASSOUD AND DEAN GREGORY HESS BY JASON TOLKIN

FOR SENIOR THESIS FALL/2010 NOVEMBER 29TH, 2010

Table of Contents

Abstract …………………..…………………………………………………………… 1

Introduction ………………………………………………………………………….. 3

Chapter 1: The Economics of the Airline Industry ………………………. 6

Chapter 2: Managing Cost Structure ……………………………………………. 20

Chapter 3: Performance Metrics ………………………………………………….. 33

Chapter 4: Case Study …………………………………………………………………... 45

Chapter 5: Conclusion …………………………………………………………………... 60

2

Chapter 6: Recommendations ……………………………………………………….. 62

Abstract: The purpose of this study was to determine what the critical factors are to an airline’s financial turmoil, leading ultimately to a bankruptcy filing. Over the past decade, the airline industries’ performance has been dismal, leading to 20 bankruptcy filings. As competition increases, it is crucial for airlines to know which core business areas are essential to success. This paper identifies 8 specific industry metrics that are used to compare airlines, revealing where certain airlines falter and others shine. Some of these metrics are later applied to a case study examining Trans World Airlines (TWA) and

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