Predicting The Next Airline Bankruptcy

How’s the airline business? Morningstar has this to say:

“As the industry downturn plays out in the face of higher crude oil prices, we think there’s a relatively high probability of more failures.”

The truth doesn’t get much more unvarnished than that.

In its lengthy analysis, Morningstar identifies Southwest as the airline most likely to succeed. Among the legacy carriers, it identifies the potential Delta-Northwest combo as the healthiest “if only because it would probably be the last to fall among the legacy group.”

Last to fall. There’s a ringing endorsement. And the first to fall? Morningstar names some names:

Not surprisingly, bankrupt airline Frontier scores poorly on our scale, which explains in large part why the firm’s credit card processor forced the airline into Chapter 11, despite the more than $100 million in cash on hand. Interestingly, however, several airlines score even worse than Frontier, including Mesa Air, US Airways and ExpressJet.

Morningstar even did a video on the topic:


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