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Are the bankrupt skies the friendliest?

Federico Ciliberto () and Carola Schenone

Journal of Corporate Finance, 2012, vol. 18, issue 5, 1217-1231

Abstract: We use data from the US airline industry to investigate whether firms that are under bankruptcy protection, as well as these firm's product market rivals, change the quality of the products they offer. We measure the quality of the services offered by a carrier using flight cancelations and delays, and the age of the aircraft used by the carrier. We find that delays and cancelations are less frequent during bankruptcy filings but return to their pre-bankruptcy levels once the bankrupt firm emerges from bankruptcy. We also find that firms use Chapter 11 filings to permanently reduce the age of their fleet. We do not find evidence of statistically and economically significant changes by the airline's competitors along any of the dimensions above.

Keywords: Bankruptcy; Chapter 11; Product market quality; Airline industry (search for similar items in EconPapers)
JEL-codes: G33 L13 L93 K2 (search for similar items in EconPapers)
Date: 2012
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Working Paper: Are the Bankrupt Skies the Friendliest? (2010) Downloads
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DOI: 10.1016/j.jcorpfin.2012.07.005

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