Continental Bankruptcy

An analysis of the Continental Airlines bankruptcy.

This paper is an in-depth analysis of the bankruptcy of Continental Airlines in 1990. It provides at least both long-term and short-terms analysis of the bankruptcy, relying for the former on an analysis of the state of the American airlines industry in 1990 and for the short term specific economic information relevant to Continental at the time. The author discusses what caused the bankruptcy and whether it could have been foreseen.
“The major overall economic element affected the entire American transportation industry in 1990 (this included not simply the airlines industry) was the issue of deregulation. For many years, the transportation system of the United States existed within an economic system of a high degree of regulation. That this should have been so should not surprise us if we look only at the legal and not the economic context of the transportation system.

The transportation network of the United States has been, since 1789, subject to a high degree of management by the federal government for the simple reason that this is one of the primary functions of the federal government – to oversee those activities that cross state borders.”