Here we go again…the Permanently Failing Organization: An application to the airline industry in Eastern Europe

• We examine the performance of airlines in Central and East Europe (CEE).
• The “Permanently Failing Organization” (PFO) framework is used to evaluate airline performance.
• Alongside traditional explanations for poor performance of airlines in the CEE region, we find evidence to support the PFO.
• External stakeholders are found to be especially important in the fostering of permanent failure.

This paper analyzes the performance of the Central and Eastern Europe airline industry through the lens of the “Permanently Failing Organization” (PFO) framework. Based on elite interviews from management in the three airlines but also from other organizations within the industry, it confirms the salience of key theoretical features of the PFO framework by providing evidence for the persistence of short-term decision making; ongoing contradictions between articulated strategy and its poor or non existent implementation and frequently assiduous intervention by governments that rather than fostering decisive decision-making served to do the opposite. These factors contributed to reinforcing deeply held beliefs in the management that they would survive despite the obvious problems they have faced. External stakeholders – especially governments should reflect carefully on their role in fostering permanent failure.