An ultimate crisis: Bankruptcy, which at best sends all the wrong messages

News today that is relevant in all America‘s smaller cities that rely on so-called “commuter” or “regional” airlines to reach larger cities and bigger planes: Pinnacle Air, the parent of Colgan Air, filed for bankruptcy.

This is particularly significant in upstate New York‘s major cities, because that’s how most people get in and out. But it’s also noteworthy because Colgan Air 3407 crashed in 2009 in Clarence Center, outside Buffalo, killing 49 people on the plane and one on the ground.

Colgan will pretty much disappear in this filing, which we must be reminded doesn’t mean the two companies are kaput, only that they will have time to reorganize and benefit from corporate bankruptcy laws affecting labor agreements, worker firings and revenue priorities.

In the case of these two airlines, the move undoubtedly makes it harder for the families who lost loved ones on 3407 to collect damages from their pending lawsuits.

But let’s talk about crisis management. Bankruptcy offers legal protection, but it also screams bad management, poor decision-making, faulty fiscal choices and wraps them all in a ribbon printed with, Unless we’re really lucky, we’re DOA.

“We intend to use the Chapter 11 process to reset our financial and operational structure in order to position Pinnacle for viability over the long-term,” said Sean Menke, Pinnacle’s president and CEO. “Quite simply, our current business model is not sustainable, as increasing operating expenses, liquidity constraints, business integration delays and difficulties associated with combining our operations have hindered our ability to maximize our growth potential.”

Plenty of prominent companies declared bankruptcy, some of which went away, though a few bounced back. Enron, Adelphia, and Tyco are in the graveyard. Chrysler, PG&E and U.S. Airways rebounded.

Even prominent individuals who went bankrupt later soared to greatness: Abraham Lincoln; Henry Ford, H.J. Heinz and Burt Reynolds. You could even get your bust on a coin if you come all the way back.

As a crisis, however, bankruptcy is akin to an environmental disaster [Exxon Valdez; BP]; a sex-abuse scandal [the Catholic Church]; a major crime involving key leaders [Watergate].

There’s not a ton to say. Menke explains it as well as anyone might. Fact is, you don’t want to say anything that will make people remember you or your company.

Let’s face it, when one part of your company is associated with gross incompetence leading to the deaths of 50 people, making its name go away forever is a good idea.


About steveoncrisis

The content is about crisis management and mismanagement in a digital age. It comes from Steve Bell, who spent 30 years as a journalist for the Associated Press and as managing editor and editorial page editor at The Buffalo News. He is now Partner/Director of Public Affairs at Eric Mower and Associates, one of the nation's largest independent advertising, integrated marketing and public relations agency with six offices in the Northeast and Southeast.
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