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RE: Airlines Planning Asking For More Aid

Mon Sep 23, 2002 11:58 pm

Ridiculous. This is, ladies and gentlemen, the dawn of a new era. This is now the era where those with poor business planning can request a check from the government. This is the era where because businesses have built a lethargic infrastructure that cannot adapt to new circumstances, taxpayers get to prop them up and foot their bills. This is the era where poor decisions by a corporation gain it a government-led propping-up, rather then the wrath of an unforgiving marketplace.

This is simple lunacy.

When buggy-whip manufacturers saw their profits edged out by the new-fangled automobiles, did they appear in front of Congress and ask to be propped up, even though their product was no longer desired by the public and they failed to properly engineer their companies to adapt to new market dynamics?

A long time ago, during the United-USAirways debacle, I argued that a company in a cyclical industry -- especially an airline -- goes through sort of a life cycle, not uncommon to a grove of trees. You start up, you have to live in the shadows of the big guys and find a way to survive. Then you grow, and you get some of the sunshine, rather than all of the shadows. Then, you grow more and you have to learn to manage that growth. If you become too big and unweildy and fragile, then you collapse in on yourself and die. But, if you manage your growth and position yourself to be able to adapt to other situations, then you might have good years and bad years, but you'll survive.

The major carriers who are out for another welfare round have gotten too fragile -- they can't adapt to a new market. You don't see Colleen Barrett, Jeff Potter, or Bill Ayer with their tin cups out asking for spare change. Why? They're too busy actually running their companies. I'm puzzled as to why Joe Leonard is out there predicting doom and gloom: AirTran can definitely make money nowadays, so either FL is not as well-positioned as I thought, or Leonard is greedy.

I don't want one red cent going to the likes of United or the other group of outrageously mismanaged carriers for creating these behemoth businesses who can't survive a change in the marketplace. If they can't survive on their own, let them die -- all of them. Where there's demand, there will be someone to step in and serve it... hopefully by a carrier who's actually been responsible in doing some disaster planning rather than relying on Uncle Sam to foot the bill.

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Joined: Sat Jul 01, 2000 1:02 pm

RE: Airlines Planning Asking For More Aid

Tue Sep 24, 2002 3:03 am

I have a question regarding this topic as it would relate to Continental Airlines. Let's say the government doesn't give them the aid they need. Are they going to be allowed to file for Chapter 11 a third time, or is there a limit to the number of times a company can file for Chapter 11?


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Joined: Tue Mar 20, 2001 1:32 pm

RE: Airlines Planning Asking For More Aid

Tue Sep 24, 2002 5:40 am

In a way, this is going to legitimize the consolidation of the U.S. airline industry. Some mergers are going to happen, competition be damned; because the gov't has already poured a lot of money into the industry, and would rather see people keep their jobs. If the failed USA/UAL, USA/AA merger/breakup were proposed after 9/11, it would probably get approved. The normal ways of doing business are gone, if putting a monopoly in air travel saves 1 million jobs, then the gov't will allow it, of course with strings attached. The gov't needs to close the window on their bank to the airline industry, I mean you don't see travel agents going to the government for a bailout/handout!
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Joined: Tue Jan 29, 2002 1:43 am

RE: Airlines Planning Asking For More Aid

Tue Sep 24, 2002 5:46 am

The travel agents tried to get a bailout. Tried hard. I wouldn't give them much credit. They whine way more than the airlines.

RE: Airlines Planning Asking For More Aid

Tue Sep 24, 2002 6:16 am

Flashmeister: There needs to be someone from the LCCs. Say that the government announces it will 'give' money to failing carriers; all of a sudden FL, WN, B6, etc. aren't on a level playing field anymore, they get to try to compete with subsidized companies. If they do give out money, but base it on revenue, then that could be perceived as unfair to the LCCs. It is also a venue for him to say that FL isn't in as bad shape as the majors b/c they have adapted, and cut down costs over 12% since 9/11 while the majors just screamed bloody murder. This way, the feds might rule in favor of the LCCs: no more handouts. Carriers actually have to adapt, and the government will acknowledge that there is such a thing as corporate Darwinism, whether they believe in evolution in life or not.

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