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So, the post-BK growth was the key...
luvn737s said:HP shed it's 747s and DHC-8's in it's first bankruptcy.
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BoeingBoy said:"It’s a myth that you cannot shrink to profitability in bankruptcy"
Well, much has been made of the "CAL example" in this thread. So my question to those who cite it as an example of "shrinking to profitability" is this: Exactly how much did CAL shrink before it became profitable?
I was living on the edge of IAH at the time and flying on CAL all the time. I question the term "shrinking" in relation to closing the DEN hub. Other than local employees and counter space, etc., IIRC there was no reduction in a/c or related employees. And, lord knows, they are larger today than they were 9 years ago.funguy2 said:Good question Boeing Boy... as the "CAL example" shrinkage was a result of their 1995 restructuring, not of the 1983 or 1991 bankruptcies.
IIRC, CAL Lite was around 1995, coinciding with GSO ramp-up and DEN closure... CAL Lite was folded in about a year, and assets redeployed to the remaining hubs at CLE/IAH/EWR. Of course, the major shrinkage here being the DEN hub closure. Perhaps DEN was slowly shrinking after the 1991 BK?
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WorldTraveler said:USFliBoi,
Have a look at CAL’s annual report for 1997 which contains financial data back to 1994.
http://www.continental.com/company/investo...tal_ar_1997.pdf
Note that between 1996 and 1997, CO’s passenger revenue increased 14% while labor expenses increased only 11%. That pattern continued throughout the 90s as CO improved its margins by 30% or more each successive year.
Continental Airlines succeeded in transforming itself because it went after new revenue, not because it went after the employee’s paychecks. Yes, CO used bankruptcy to shed costs under the former corporate structure but it took building a new revenue plan to turn the company around. USAirways’ plan is based totally on cutting costs, not on creating new revenue streams. Every airline that has increased its fortunes have created revenue, not just slashed costs in order to return to profitability.
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