Why Do Unsuccessful Companies Survive? US Airlines, Aircraft Leasing and GE, 2000–2008
Business History Review, Forthcoming
52 Pages Posted: 23 Nov 2021 Last revised: 24 Nov 2021
Date Written: November 18, 2021
Warren Buffett famously commented that the US airline industry had made zero profit in its first nine decades. Subsequently, between the millennium and the Great Financial Crisis the airlines in total lost almost $60bn. Yet no major airline was liquidated or taken over in those nine years. Financial support was repeatedly provided by GE, the conglomerate supplier of leasing finance, engines and servicing. The paper offers a historical perspective on the factors behind this relationship between GE and airlines. It outlines the benefits or costs to GE, airline shareholders, and passengers; the relevance of the model for other industries; and implications for different notions of efficiency.
Keywords: Airlines; leasing; bankruptcy; liquidation; reorganization; General Electric
JEL Classification: N2, N72, K2, K10, G00, G14, G33, D43, D61
Suggested Citation: Suggested Citation