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The Airlines Could Show Big Three the Way

Still, the Pan Am bankruptcy may be instructive for the auto industry. For one thing, management and labor worked together to forge contract terms for a new Miami-based Pan Am. They reached a deal, after working through the night of Dec. 3, 1991.

However, in court the next morning, that plan collapsed, idling 7,500 workers, because Delta decided at the last minute not to provide promised financing. Delta did, however, acquire Pan Am's Kennedy hub, saving the jobs of about 8,000 employees who came with it. Today, the Kennedy hub is a major asset, underpinning Delta's international expansion.

The success of the recent bankruptcies has been even more obvious.

In the case of US Airways, then-CEO Bruce Lakefield, a retired Lehman Brothers executive, approached bankruptcy with the idea that he wanted to save jobs. "I didn't really come into this for anything but that reason, and that mission was accomplished," he said in a 2006 interview. "Whenever I ride an airplane, and I ride fairly often, more people thank me than I could ever imagine."

Delta not only survived its bankruptcy but also, more than any other carrier, took the opportunity to remake itself, emerging as an international airline and dramatically boosting its level of unit revenue relative to competitors. The subsequent merger with Northwest built on that base.

At one point at Tuesday's hearing, Sen. Mike Crapo, (R., Idaho) referred to bankruptcy, noting: "Delta Air Lines went through it, and now we see some significant progress there," but he could not erase the specter of the bankruptcy bogeyman. "We just can't be confident that we'll be able to successfully emerge from bankruptcy," said Chrysler's Nardelli.

Ron Gettelfinger, president of the United Auto Workers, went even further, seeming to view bankruptcy as a contagious disease. "If one of these companies was to go into bankruptcy, he said, "I would almost bet it would take another one with it, or possibly all three."

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