GAO Takes Aim At Airlines, Bankruptcy, Pensions...

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Costs (Pilot Pay Included?) To Blame

Bankrupt airlines may just be delaying the inevitable by walking away from their pricey pension plans, according to a report released last month by the Government Accountability Office (GAO). The report (PDF file) says that even without the pension-contribution burden ($10.4 billion over the next four years) the so-called legacy carriers may remain financially challenged unless they get their costs under control. "... These airlines will have trouble meeting their various financial obligations, regardless of whether they terminate their pension plans," the report reads. Even without the pensions, the average legacy carrier will continue to lose money (and pile up debt), according to the GAO. And while bankruptcy is regarded as a way for companies to not only walk away from expensive obligations, but to reinvent themselves as viable businesses, that hasn't been the case for airlines. The GAO says few airlines that have gone into bankruptcy have survived intact. Indeed, of 22 (!) airlines that have filed for bankruptcy only four (Atlas Air Polar Cargo, Hawaiian, Fine Air and Kitty Hawk) have emerged successfully. US Airways emerged but later re-filed.