The Biggest Airlines To Ever Go Bankrupt

2019 has been a troubling year for aviation. If there was ever a place to look for a global slowdown it is in the airline sector. Multiple carriers from around the world have gone out of business this year, but it’s not all doom and gloom.

Contrastingly, for some of the more established carriers around the world, revenue and passenger loads are very strong, however, with competition from low-cost carriers stronger than ever, and a cannibalisation of ticket prices globally due to strong price sensitivity, airlines can fail due to very small market movements. With input costs varying from fuel to wages, maintenance to fleet renewal, running an airline is no easy business. The failure rate for a carrier, both big and small is higher than in almost any other sector.

This weekend we saw a last-minute cash injection to save Hong Kong Airlines from the brink of bankruptcy, but other major carriers that have recently gone bust include Jet Airways in India, Iceland’s WOW and Thomas Cook in the UK this year.

Elsewhere the aviation sector has seen continual consolidation for growth and survival. In the U.S. many well-known carriers from Northwest to Continental have been absorbed by Delta and United respectively to ensure market survival and growth.

However, there have been many high profile instances where major airlines just haven’t made it. Here are some of the biggest airlines to ever go bust.

PanAm

One of the most well-known carriers in the world, even today, eventually failed in 1991. PanAm is widely recognised as being the airline that coined mass travel in the golden years. Operating the world’s largest fleet of Boeing 747 jumbo jets, PanAm seemed unstoppable in the 1960s. However, over-expansion began to take its toll in the late 1970s and 1980s. With a growing fleet of 747s and a reputation for glamour, PanAm simply couldn’t make enough money to keep up with rising fuel costs and competition when the oil crisis hit in 1973. Issues with labor unions and the fatal downing of Pan Am 103 were the eventual nail in the coffin for one of the world’s most famous carriers, even today.

Trans World Airlines

TWA was Howard Hughes’s brainchild to compete with Pan Am during the glory days of air travel. Pan Am was afforded much protection as the incumbent U.S. carrier and Hughes wanted to challenge that. Similarly to PanAm, TWA was a cultural icon, which is illustrated by the resurrection of the infamous TWA terminal into a hotel at JFK airport in NYC over the last year. With a large order for intercontinental Boeing aircraft, Hughes had used almost the last of his financial resources to purchase the aircraft and began to decline deliveries from manufacturers in a bid to delay payments. A changing of the guard at the airline occurred and the true aviator in Hughes was replaced by essentially a consortium of bankers who didn’t fully back the airline industry. Talking TWA private in 1988 saddled the airline with a heap of debt and from that moment on, after selling the TWA prized London routes to American Airlines, the carrier had been asset stripped and was destined for its inevitable bankruptcy in 1992.

Laker Airways Skytrain

Sir Freddy Laker was another visionary who wanted to disrupt the corporate aviation model that PamAm had taken such a strong grip of across the Atlantic. Laker purchased a fleet of DC-10 and A300 aircraft that cruised across the Atlantic at half the cost of other carriers. As we have seen lately with so many airline failings, the same old error repeats itself. Over expansion in the 1970s meant that the airline had borrowed $270m at an interest rate it could only afford if it kept up rapid expansion, and it didn’t. At the time, Laker failed in 1982 and this was called the biggest corporate failure ever in the U.K. at the time.

Ansett Australia

Many Australians will remember the days when Australia had a major rival carrier to Qantas. Qantas has long survived and even thrived by taking the majority of market share on international routes to and from Australia. Ansett was already facing serious financial difficulties and by September 2001, could no longer afford to stay in business.

Braniff International

Many aviation geeks will remember Braniff for perhaps adding the most color into aviation we have ever seen. Multicolored aircraft from green to orange originated from Texas. Such was the strength of the brand that on multiple occasions attempts have been made to resurrect the airline, without luck. Similar to many airlines at the time, Braniff expanded rapidly on international routes, and when revenues couldn’t keep up with soaring fuel costs the airline could no longer sustain its debts, eventually failing in 1982.

Eastern Air Lines

Eastern has recently seen its resurrection, by name brand at least. Like so many other carriers that didn’t make it on this list, their brand was so infamous that many investors have wanted to keep them alive. Many analysts will point to the fact that labor unions and strikes brought down the Miami-based carrier in 1991. The airline gave 25% of its stock to its 38,000 workers in 1984 in an attempt to keep its 190-string fleet flying, but the bitter strikes never stopped, with the airline’s eventual demise sending shockwaves through the aviation industry.

Interflug

Germany used to have a second major airline believe it or not. Interflug was considered Eastern Germany’s main carrier, however, after the reunification of Germany and stiff competition from Lufthansa, Interflug couldn’t find a buyer for its business in 1991 and ceased to operate

Transaero

Transaero was a serious competitor to Aeroflot in Russia. Similar to Kingfisher and Jet Airways in India, the airline was strongly successful as a private entity as passengers craved completion from the incumbent flag carriers. After many successful years of profitability, the tables quickly turned for Transaero, who had accumulated over $4 billion of debt. With no bank bailout or bid from Aeroflot, the huge airline ceased operations in 2015

Monarch and Thomas Cook Airlines

Monarch’s failure can largely be attributed to actual market conditions rather than an aggressive expansion strategy. Both Monarch and Thomas Cook had been struggling for years due to stringent price competition from low-cost carriers in Europe including Ryanair and EasyJet who ran much larger operations. The airlines had attempted to reduce routes to strive towards profitability, but after rising fuel costs and forced cancellations of profitable routes to winter sunshine destinations in Egypt and Turkey hit, the airlines simply couldn’t survive any longer.

Sabena

Belgium’s National airline had been in operation for 78 years until they couldn’t find further investment in 2001. There was chaos at Brussels on the airlines failing without a bailout as Sabena workers protested, with other carriers diverting flights away from the Belgium capital. SwissAir (which also collapsed a year later in 2002), was Sabena’s co-owner and simply needed an investor to take them out of their stake, there was no more cash coming in to save the struggling carrier. European Commission rules on state aid prevented the Belgium government from stepping in to provide the airline support, and clearly, major political repercussions ensued.

Mexicana

One of the airlines on this list that operated for the longest period. From 1928 to 2010, Mexico’s largest airline failed inevitably blaming expensive labor contracts. A very similar story to many previous airlines that met their demise, Mexicana simply couldn’t find a bailout or investment to ensure its survival.

Air Berlin

In recent years, no airline failure has left passengers with such a bitter taste that a strong brand has disappeared from the skies as Air Berlin. Similar to the major U.S. carriers of decades past, Air Berlin was veneered by its customers. After the airline failed, branded items from food carts to branded seat rests were auctioned off. Etihad refused to pump more cash into the loss-making airline after cost-cutting plans failed to materialise. Once Europe’s fourth-biggest carrier, the airline’s losses scaled to a staggering $900m a year over 2 years.