While many remember the early aughts like it was yesterday, 2002 is a lifetime away when it comes to aviation. In the aftermath of 9/11, lawmakers and the Federal Aviation Administration were in the process of introducing new rules for airlines while travel was in a prolonged recession due to large numbers of Americans being afraid to fly.
All this, along with accumulating debt and multiple labor disputes in the summer of 2000, led to United AirlinesUAL filing for Chapter 11 protection on Dec. 9, 2002.
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Some might not remember that United Airlines filed for bankruptcy in 2002
With what was then the second-biggest airline in the country declaring $22.8 billion in assets and $21.2 billion in liabilities, United Airlines’ 2002 filing remains one of the biggest bankruptcies in aviation history.
After more than three years under court protection and an emergency plan that included $7 billion in cost reduction at the expense of 26,000 jobs and the sale of 55 airplanes, a federal judge approved United’s bankruptcy exit in January 2006.
“We are concluding our restructuring work and look forward to competing in the marketplace and focusing on our customers without distraction,” then-CEO Glenn F. Tilton wrote in a memo to employees. The airline had, by that point, been in bankruptcy for about 36 months or exactly 1,150 days.
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Since then, the airline has had a long journey toward profitability and now is placed among the “big three” U.S. airlines alongside Delta (DAL) and American Airlines (AAL) . In October 2024, United reported third-quarter earnings of $14.8 billion in revenue and $1.3 billion in profit even as it sold fewer seats than in the previous quarter of busy summer travel.
Along with competitors like Delta and JetBlue (JBLU) , United is now viewed as one of the financial success stories at a time when a number of other airlines are struggling to turn a profit due to high jet fuel costs and waves of travel demand to highly served destinations.
Related: Investor calls out Spirit Airlines CEO’s pre-bankruptcy bonus
The biggest airline bankruptcy story of 2024 is Spirit
The biggest bankruptcy story of the year has centered around Florida-based low-cost carrier Spirit Airlines (SPR) .
After initially spending months reassuring investors and travelers that it would not file for bankruptcy after a federal judge blocked it from getting acquired by JetBlue, the low-cost carrier finally asked for Chapter 11 protection in the Southern District of New York on Nov. 18.
This immediately gave Spirit $300 million in additional financing to continue operations as it looks to find a way forward with more than $3.8 billion in debt. At the start of December, one shareholder sent bankruptcy judge Sean Lane a letter accusing the airline of being in talks with law firm Davis Polk & Wardwell even when denying the possibility to shareholders as well as expressing outrage at the $3 million retention bonus CEO Ted Christie is slated to receive despite the current financial situation.
“This gross enrichment of the very people responsible for Spirit’s financial collapse has come directly at the expense of shareholders who trusted the company with their life savings,” the letter reads.
Related: Veteran fund manager sees world of pain coming for stocks
