Inasmuch as its labor negotiations with the pilots’ union are not going well, the Washington Post reports that US Airways Group Inc. confirmed yesterday that it has retained the restructuring advisors Seabury Group and the Washington, D.C.-based law firm of Arnold & Porter LLP to provide restructuring advice for its upcoming chapter 22 filing (US Air filed its first chapter 11 case two years ago; thus, its second case is dubbed a chapter “22” in legal circles).
With few exceptions, the management of U.S. airlines has a desultory record in creating value for shareholders. Given that poor track record, you would think that management and creditors in these companies could at least reorganize the companies in a manner that gives the reorganized company a competitive advantage after coming out of chapter 11. However, as these chapter 22 and 33 reorganizations of airlines reflect, the parties involved in these airline reorganizations often cannot even reorganize the airline companies effectively.
Makes one wonder when some Bankruptcy Judge, in exasperation with it all, will decide that Professor Ribstein’s solution, at least in the most intractable cases, is the correct one?