AviationGeeks.com - Is there life for airlines after crash?

Founded: March, 1927

Ceased operation: December, 1991

Fleet size: 226

Pan Am was one of the original U.S. legacy carriers. The airline was started in the late 1920s by Major Henry H. Arnold and the Shell company when they received U.S. Mail delivery contracts. Pan Am was pioneer in aviation at the time, being the launch customer of Boeing 747 and introduced innovative electronic reservation system. At its peak, when the airline´s slogan was "World's Most Experienced Airline," Pan Am had a fleet of 226 aircrafts, flew to up to 160 countries in all continents except for Antarctica, and had revenues exceeding $4 billion. Its fleet consisted mainly of Airbus A300 and A310, and Boeing 727, 737, and 747, And Lockheed L-1011.

Photo by Wolfgang Mendorf

Pan Am´s financial trouble began in the mid 1970s with the energy crisis, decreased demand in air travel, and increased competition on international routes. In addition, Pan Am had a large order of Boeing 747 at the time which increased the financial burden. Following the Airline Deregulation Act of 1978, the competition on international routes increased greatly. When the deregulation was put in place, other US airlines were allowed to compete with Pan Am on international routes, but at the same time, Pan Am was not allowed to compete in the domestic market as other airlines convinced authorities that Pan Am would gain monopoly market power if they were allowed to compete on domestic routes. In 1980, Pan Am bought overpriced National Airlines for $400 million.

Boarding Card from Bill Rich

In January, 1991, Pan Am filed for bankruptcy. Delta Airlines bought some of Pam Am´s profitable assets and invested $200 million for a minority stake of a new, smaller and reorganized Pan Am. The reorganization of the airline never went through and Delta stopped its payment and Pan Am ceased operations in December, 1991.

Photo by Bill Rich

It was Flight PA103 that contribution greatly to the fall of the Pan Am. 21^st of December, 1988, Boeing 747 from Pan Am departed London, Heathrow and was heading to New York when a bomb in the forward cargo exploded. A large hole was left in the fuselage and cargo containers were blown out and hit the empennage. The flight deck was separated from the rest of the aircraft as the aircraft went into a noise down. The 747 crashed into Lockerbie killing all 259 persons aboard in addition to 11 persons on the ground. Libyan terrorists were found guilty of planting the bomb. The airline´s high publicity exposure made is a popular target for terrorist organizations.

The bombing exposed many security problems that the airline was having and it resulted in decrease in sales. The Pan AM brand became associated with unsafe flying. The airline was also subject to a $300 million lawsuit. The Pan American World Airways brand never recovered from the bombing and was bankrupt 3 years later.

Photo by Wolfgang Mendorf

Swissair

Founded: March, 1931

Ceased operation: March, 2002

Fleet size: 76

Swissair, the former national airline of Switzerland, was founded in 1931 by the merger of Ad Astra Aero and Balair. Swissair became a major international airline with a fleet of 76 aircraft, 157 destinations and was called “the flying bank” due to its large liquidities. One of Swissair´s key strength was because of neutrality of Switzerland, Swissair was able to fly to locations in Africa and the Middle East that many other nations were not.

Swissair´s financial problems started in the early 1990´s when many airlines were having difficulties because of weak economy and rising fuel prices. In the 1990´s, Swissair initiated the Hunter Strategy, aimed to expand Swissair´s market share by taking over other airlines. The takeovers created cash flow problems for the airline which made it vulnerable to changes in the market. So when the airline suffered a major crash followed soon by the September 11^th attacks, the airline went bankrupt.

Photo by Wolfgang Mendorf

The crash that severely affected, if not bankrupted, Swissair was flight SR111 from JFK, New York heading to Geneva, Switzerland. 40 minutes after takeoff the pilot reported smoke and odor in the cockpit and determined it to come from the air conditioning system. The pilots made a decision to fly to Halifax, 66 nm away. The aircraft never made it to Halifax and crashed into the ocean of the coast of Nova Scotia. The reason for the crash was found to be fire in the electrical system and there were many discrepancies found during the investigation, such as standards for material flammability were not sufficient and wrong type of circuit breakers were used. This led to a negative publicity for Swissair.

The airline suffered major financial difficulties following the crash and were struggling when the September 11 attacks were made. The airline was bankrupt within 6 months of the attacks.

Other airlines

There are several other airlines that have suffered greatly as a result of a crash. Those airlines include Aloha Airlines, ValuJet Airlines, Air Florida, Eastern Airlines, Adam Air and Air Tahoma.

Aloha Airlines suffered a famous incident in 1988 known as the Convertible Flight. The aircraft was extensively damaged after explosive decompression in air. The aircraft was able to land in Maui, but there was one fatality, in addition there were 65 persons injured. Due to the extent of the damage on the aircraft, it became a high publicity case and the airline suffered greatly because of that. But the airline did not cease operation until 20 years after the crash.

ValuJet Airlines suffered 2 high publicity incidents within one year. One was aborted takeoff at Hartsfield Atlanta International Airport after a catastrophic engine failure, were pieces of the engine penetrated the fuselage. The second incident was the famous everglade crash resulting in 110 deaths. The ValuJet brand was severely affected and the same year as the second crash, the airline re-branded to AirTran Airways. AirTran has since done quite well.

Photo by Gerard Helmer

Flight 90 of Air Florida crashed Washington, DC's 14th Street Bridge killing 74 people on board in addition to 4 people on the ground. The airline ceased operations 2 years after the crash.

There are of course several examples of airlines that have had a large crash, without it bankrupting the airline. Though most of those airlines did not have the underlying financial problems as the airlines in this article.