Managerial and Organizational Challenges
New Horizons in Management series
Edited by Ronald J. Burke and Cary L. Cooper
Chapter 12: Airline Industry Responses to September 11th
* Jody Hoﬀer Gittell, Kim Cameron, Sandy Lim and Victor Rivas INTRODUCTION The US airline industry faced devastating losses in the wake of the September 11th, 2001 terrorist attacks. According to Kevin Murphy (2001), airline industry analyst for Morgan Stanley, ‘If there was ever a stress test for a good business, this is it’. The day after the attacks, the major airlines appeared in front of Congress seeking relief in the form of federal assistance. Fifteen billion dollars were allocated to the industry, some in the form of outright grants to cover the loss of operating revenue in the days after the attacks when the industry was shut down by federal order. The rest of the $15 billion allocation was made available in the form of loan guarantees to be allocated according to rules established by the Air Transport Stabilization Board. Even with this federal assistance, however, the industry continued to lose millions of dollars on a daily basis due to the slow rate of passenger return. In response to these losses, the major airlines cut their ﬂights by an average of 20 percent and laid oﬀ an average of 16 percent of their workforces in the weeks following the attacks. Even though all of the major airlines were devastated about equally in terms of the initial decline in passenger traﬃc, however, they did not respond in the same way. Some airlines emerged from this crisis resilient and strong, whereas others languished and even confronted bankruptcy. This chapter investigates...
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