blrsea
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British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 5:45 am

BA chairman slams US bankruptcy laws.

Eddington says U.S. turning 'itself into the land of the free ride'

Quote:
Sir Rod Eddington on Thursday used his last public speech as British Airways chief executive to berate the U.S. for its use of "protectionism" to prop up failing domestic airlines.

"America, the land of the free, is turning itself into the land of the free ride," he said.

...
He accused the U.S. of hypocrisy in its approach to global free trade. "The lessons America has been imposing on third world markets with an almost pitiless ferocity apply to America just as much."

...
"This is offensive because it is stupid, because it doesn't benefit anyone, because it encourages inefficiencies, rewards bad habits, drives out good money and replaces it with bad."
 
AirbusA6
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:07 am

Perhaps they should complain to the WTO! Big grin
it's the bus to stansted (now renamed National Express a6 to ruin my username)
 
Byrdluvs747
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:21 am

It is every americans god given right to stiff creditors via the courts. Big grin
The 747: The hands who designed it were guided by god.
 
satx
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:28 am

Quoting Blrsea (Thread starter):
"America, the land of the free, is turning itself into the land of the free ride," he said.

 checkmark  100%!

Personal welfare has been hacked to the bone under both Clinton and Bush, but who has the balls to do something to about corporate welfare?
Open Season on Consumer Protections is Just Around the Corner...
 
B744F
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:29 am

Quoting Byrdluvs747 (Reply 2):
It is every americans god given right to stiff creditors via the courts. 

Good luck, now that the new laws have passed
 
N1120A
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:33 am

Um, how about US carriers bitch about BA's initial government set up, built in dominance of London Heathrow, etc. and see what BA says
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
BCAL
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:43 am

Quoting N1120A (Reply 5):
how about US carriers bitch about BA's initial government set up, built in dominance of London Heathrow, etc. and see what BA says

Does not the same apply to AF, which is still partly owned by the French Government and has far more built in dominance at CDG compared to BA's dominance at LHR. For your information today's BA does not have any aircraft that were funded by the taxpayer. All BA aircraft are now owned or leased using finance obtained from their working capital or from EMTLs through the Stock Exchange and other commercial sources.

Edington is right. Is it unfair competition that the US airlines have the protection of Chapter 11. There is no similar arrangement available in the UK. The nearest would be to call in the receivers and the airline would then be run in administrative receivership.
MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
 
Dougloid
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 6:54 am

Bankruptcy as a subsidy? It's preposterous, and it's a testimony to how wrong an adult can be about things of which he knows bupkis.....maybe what His Nibs ought to do is spend a few days with me in court seeing people and businesses getting savaged in bankruptcy-I could wipe that silly grin off his mug without even breaking a sweat.

Methinks His Onions ought to stick to his knitting.
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
Tango-Bravo
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:07 am

Quoting Byrdluvs747 (Reply 2):
It is every americans god given right to stiff creditors via the courts

Not true anymore for your average ordinary everyday working American. Nothing however (to my knowledge) has changed with regard to the ability of big business, airlines it seems in particular, to stiff creditors and their employees behind cover of bankruptcy court rulings that have turned the law into a corporate welfare scam. And nothing seems to prevent the payment of 6-7 figure bonuses to members of management responsible for the court-protected stiffing of everyone in sight.
 
Sydscott
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:08 am

Quoting Dougloid (Reply 7):
maybe what His Nibs ought to do is spend a few days with me in court seeing people and businesses getting savaged in bankruptcy

Maybe what you, and American Airline execs, should do is to go to airlines that actually make a profit and study how this occurs. Maybe a group tour at Southwest, a jaunt to London on BA, a sidetrip to Asia to Cathay Pacific or Singapore. I know it may be hard for you to fatham airlines operating without bankruptcy, but why should these companies be protected after squandering as much as they have?? They shouldn't!!! They dug their own grave for whatever reason and the time has come to let them slip into oblivion. That way the employees can find new jobs, which will inevitably be created by stronger airlines expanding, and the stockholders/bankers and brokers can get on with financing businesses rather than basketcases. Let them die, as we did Ansett, and let the strong survive.
 
airways45
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:13 am

Rod is absolutely right - the existence of Chapter 11 is a major problem and is not helping the financial health of the US airline industry.

There's too much capacity in the US market at the moment - fares are just too low (great for people flying, terrible for airlines who can't make money). By allowing airlines who are financially dead to linger on just ain't right.

You've now got the situation where other US majors are considering going into Chapter 11 so that they too can have the reduced cost structure of their rivals (for instance, AA might have to do this now NWA & DAL is in Chapter 11).

How many times can management change at the majors, how many times are majors allowed to screw up before someone says - hey, you are all turkeys, let another airline have a go and see if they can do it better.

Chapter 11 has become a way out for lousy management. It shouldn't provide this opportunity.

Take SWA - never been in Chapter 11 but is competing against those airlines that are being propped up at taxpayers expense. Fair to SWA? No. Fair to jetBlue - no.

For my US friends - remember, in Europe there isn't such a safety net. Who would have imagined that the airline based in the home city of the EU - Brussels, would be allowed to die because financial help isn't allowed to be given to it? Sabena would still be in Chapter 11 if Europe had the US system.

Isn't it also strange how airlines come out of Chapter 11 and spend money on nonsense - rebrands. Why Air Canada was wasting money on new colours (no matter how nice) beats me. But Chapter 11 helps you lose touch with reality.

No airline has a god given right to suceed. However, that's what I believe UAL thinks - so they force cheaper lease rates, force through lower wages, pensions etc.

What other industry can you think of that behaves the way the airlines do? Which other industries allow slow deaths which benefit nobody?

If they can't survive without Chapter 11, then they shouldn't be in the business in the first place. It should be removed straightaway in my view.

This is echoed by all of the aviation analysts I know - nobody supports Chapter 11 unless you work for the airline in question (or hold their frequent flyer points, in which case you are biased). We all felt US Airways should be allowed to die for the good health of the industry, to remove capacity, to allow fares to increase and restore profitablity).

Just my view!

Airways45
 
BCAL
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:15 am

Quoting Airways45 (Reply 10):
Just my view!

Spot on  thumbsup 
MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
 
VC-10
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:20 am

A business exec recently said on BBC radio that Chapt 11 is there so that companies can legally defraud their creditors
 
vv701
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:21 am

Quoting Dougloid (Reply 7):
Bankruptcy as a subsidy?

No. But Chapter 11 Bankruptcy clearly is a subsidy.

If you have creditors and the law says you do not have to meet your obligations to your creditors and the management who got the company into its current financial state is allowed to go being paid by and running the company and (finally) the shareholders interests are put above those of the creditors then the creditors are clearly subsidising the companies operations and the shareholders investment.
 
SuseJ772
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:22 am

Quoting Blrsea (Thread starter):
"America, the land of the free, is turning itself into the land of the free ride," he said.

I sort of agree in regards to Ch. 11 only!

Quoting N1120A (Reply 5):
Um, how about US carriers bitch about BA's initial government set up, built in dominance of London Heathrow, etc. and see what BA says



Quoting BCAL (Reply 6):
Does not the same apply to AF, which is still partly owned by the French Government and has far more built in dominance at CDG compared to BA's dominance at LHR.

I don't think N1120A was necessarily saying there was anything wrong with BA's setup by there government, but rather BA shouldn't be so hypocritical when dealing with the US airlines.
Currently at PIE, requesting FWA >> >>
 
N1120A
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:29 am

Quoting BCAL (Reply 6):
For your information today's BA does not have any aircraft that were funded by the taxpayer.

But the aircraft that they have purchased were funded on the backs of the ones that were

Quoting BCAL (Reply 6):
The nearest would be to call in the receivers and the airline would then be run in administrative receivership.

Remember, UA will have a whole new set of shareholders when this is all over.

Quoting BCAL (Reply 6):
has far more built in dominance at CDG compared to BA's dominance at LHR

Ha

Quoting BCAL (Reply 6):
Does not the same apply to AF, which is still partly owned by the French Government

Yes, particularly when it was majority owned by the French government.
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
TPASXM787
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:31 am

Quoting B744F (Reply 4):
Good luck, now that the new laws have passed

And these new laws were sorely needed. An individual could declare a ch.7 bankruptcy, screw all their creditors, and a year later have a gleaming credit report. someone who tried to pay their bills, albeit slowly, looked like the bad guy.

Quoting N1120A (Reply 5):
Um, how about US carriers bitch about BA's initial government set up, built in dominance of London Heathrow, etc. and see what BA says

 checkmark 
This is the Last Stop.
 
vv701
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:42 am

Quoting TPASXM787 (Reply 16):
Um, how about US carriers bitch about BA's initial government set up

This is a great idea - for making hot air and wasting time. After all US airlines are going into Chapter 11 protection now. Something could be changed so that the playing field is moire even in the future.

But the UK government has had less influence and provided less help to BA in the last twenty years than the US government has to US airlines (an example being the subsidies to implement anti-terrorist precautions). But however much hot air you blow you will not change something that was changed all that time ago. So forget it.
 
travelin man
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:52 am

Quoting Airways45 (Reply 10):
Take SWA - never been in Chapter 11 but is competing against those airlines that are being propped up at taxpayers expense.

How does being in Chapter 11 = being propped up at taxpayers expense? Honestly, I see this statement often, but have yet to figure out what people are talking about. Chapter 11 is at CREDITORS' expense, not taxpayers.

I'm not all for lingering for years in Chapter 11, but it's farcical to say that the EU governments do not help their airlines.

See:
http://www.findarticles.com/p/articl...i_m0CWU/is_2004_Oct_11/ai_n6230704

Italian government reserves additional funds for aviation industry - report
Airline Industry Information, Oct 11, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

The Italian government's reported inclusion of EUR750m in its latest budget for "capital for companies in the air transport sector" has led to speculation that the national carrier may receive another state handout.

Alitalia has recently been granted access to a EUR400m loan guaranteed by the Italian government and approved by the European Union to undergo a radical restructure that could see the airline split into two divisions, one dealing with flight operations and the other with services, called AZ Fly and AZ Service respectively.

The new EUR750m budget allowance for aviation companies could mean that the airline receives far more than the EUR400m approved by the EU. No one from the Italian government yet commented on the purpose of this budget fund.


Talk about not letting an airline die....
 
airways45
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:10 am

Two points:

1) Chapter 11 and public money - here's the BA response:


"In the last four years, the U.S. airlines have soaked up $15 billion to $20 billion (€12 billion-€16 billion) of public subsidies and loan guarantees," Eddington Rod said. "They're operating in protected markets, they're hoovering up public funds and still they can't make a profit."

2) EU aid:

Alitalia and Olympic are examples of Europe not playing fair, I agree. These two airlines should have died years ago, so you are right to say that the EU turns a blind eye to some 'state aid'. Just the other day, assistance to Olympic from the Greek government was declared illegal and they will have to repay, from memory, 800m Euros. Quite where that money comes from is another story. Alitalia seems to have been allowed Italian government help, far too much in my opinion.
 
vv701
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:13 am

It is clear that in our airline world bad management comes out tops. If you are a US airline and well managed you have to compete against all those badly managed airlines whose management have sought and obtained Chapter 11 Protection from their creditors.

It is equally clear that if you are a European airline and well managed you have to compete against badly run government subsidised airlines like Olympic and Alitalia.

Now to my mind there is a very simple solution to all of this. You change the Chapter 11 Bankruptcy Protection laws so that protection is only granted if all top management leave the company within a defined period (of, perhaps, six months from entering bankruptcy protection). In Europe the EU should introduce a new law that results in the immediate sacking (without appeal) of management when any form of subsidy is given to an airline.

Hopefully these changes will discourage management from taking the easy option and filing for Chapter 11 protection or searching for a government subsidy.
 
travelin man
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:17 am

Quoting Airways45 (Reply 19):
"In the last four years, the U.S. airlines have soaked up $15 billion to $20 billion (€12 billion-€16 billion) of public subsidies and loan guarantees," Eddington Rod said. "They're operating in protected markets, they're hoovering up public funds and still they can't make a profit."

But I still don't get where BA is getting that information. If they are talking about the help the airlines received after 9/11, OK, that was state aid. Loan guarantees, however, are not direct state aid (and I don't know which airline received any government loan guarantee. The government rejected United's request, and HP may have received a government loan but promptly repaid it.)

Operating in a protected market? That is a complete joke for BA to talk about that particular subject. Heathrow is virtually one of THE most protected markets in the world, and BA has been one of the primary beneficiaries.

As I said, the current Chapter 11 system doesn't work that great for airlines. Which is why it is being changed. But Chapter 11 does NOT equal taxpayer help, because it is up to the creditors whether or not they want to continue funding the airline in Chapter 11.
 
CTHEWORLD
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:34 am

Quoting Sydscott (Reply 9):
Maybe what you, and American Airline execs, should do is to go to airlines that actually make a profit and study how this occurs. Maybe a group tour at Southwest, a jaunt to London on BA, a sidetrip to Asia to Cathay Pacific or Singapore.

Yes, maybe the U.S. Airline industry should take a page out of the BA/SQ/QF monopoly book! How incredibly simplistic to suggest that all one needs to do is to look at those airlines. There are many factors that put the U.S. industry where it is, not one silver bullet. Most of the problem can be placed at the feet of the U.S. government, not the companies trying to operate in a screwed up system. And BTW, the WN business model isn't scalable to international ops, and wouldnt be making money if they didn't have a hedge...they rolled the dice and won, but that doesnt mean their business model is as durable as every airline geek on this board would like to believe.
 
airways45
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:38 am

Ok, here's the deal: Chapter 11 and US Taxpayers Money - it's all about Pensions.

One of the main reasons for NWA and DAL going into Chapter 11 was the hope that they might be able to rid themselves of their huge pension liabilities which are then partially assumed by US taxpayers.

For example, United managed to avoid over $6bn in pension liabilities. The pension burden will be absorbed by employees whose expectations may
greatly exceed what they will receive from the U.S. Government program, and by U.S. taxpayers who will have to pay for the program.

Under laws enacted by Congress, the government (i.e the taxpayers) has guaranteed billions of dollars in (profitable, interest-bearing) bank loans to airlines. But when travellers make (interest-free, unsecured) loads to airlines by buying tickets now for future travel -- a significant component of airlines' financing, on which they depend -- there is no similar guarantee. If you don't think that banks are more deserving of Federal protection than consumers, or that commercial banking corporations should receive more security for their loans, at taxpayer expense, than individual travellers, complain to Congress!!
 
travelin man
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:56 am

I do understand what you are saying. However, I will repeat that for BA to complain about operating in protected markets is farcical at best. And I will also reiterate: The Chapter 11 law is changing in mid-October.
 
SuseJ772
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 9:16 am

Quoting TPASXM787 (Reply 16):
And these new laws were sorely needed. An individual could declare a ch.7 bankruptcy, screw all their creditors, and a year later have a gleaming credit report. someone who tried to pay their bills, albeit slowly, looked like the bad guy.

Again, I don't know how to reiterate this enough on this board. The new laws do not effect business and Ch. 11. They effect individuals, Ch. 13 & Ch. 7 bankruptcy filings.
Currently at PIE, requesting FWA >> >>
 
travelin man
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Joined: Tue Mar 14, 2000 10:04 am

RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 9:41 am

Quoting SuseJ772 (Reply 25):
Again, I don't know how to reiterate this enough on this board. The new laws do not effect business and Ch. 11. They effect individuals, Ch. 13 & Ch. 7 bankruptcy filings.

Ummm....please see article:

http://www.washingtonpost.com/wp-dyn...le/2005/08/02/AR2005080200329.html

If Northwest and Delta Air Lines file for Chapter 11 bankruptcy protection, as widely expected, they are likely to do so in mid-September, a month before a new, more restrictive bankruptcy law goes into effect, bankruptcy experts and airline insiders say.....

In a conference call with reporters last week, Douglas M. Steenland, Northwest's president and chief executive, refused to speculate if or when the airline would have to file for bankruptcy. But he said a new bankruptcy law taking effect on Oct. 17 would be "one of the factors" in the decision-making process.....

The new bankruptcy law was passed in April against the backdrop of bankruptcy filings for United Airlines and US Airways.

Under the new law, companies in Chapter 11 are prohibited from paying retention bonuses to executives except when the executives have proved they have job offers elsewhere. The provision was put in place to stop companies from taking money from employees hit by wage and benefit cuts to enhance packages for managers, said Lynn M. LoPucki, a law professor at the University of California at Los Angeles.

The new bankruptcy law also will force companies to reorganize and emerge from Chapter 11 protection more quickly. Companies will have up to 18 months of a so-called exclusivity period during which they must submit a reorganization plan and are protected from takeover attempts. United, which has been in bankruptcy for 2 1/2 years, has not yet submitted a reorganization plan and has asked for several extensions of its exclusivity periods. The airline plans to emerge in the fall.

The law also will require companies to make faster decisions about whether they want to reject leases of their vendors or partners. Currently, companies do not have a deadline for deciding which contracts they want to reject. After Oct. 17, companies filing for bankruptcy will have to make those decisions within 210 days. During United's bankruptcy, some airports and regional airlines have complained to the bankruptcy court that their futures were in limbo because the airline had not informed them whether they planned to continue using their services.


Sorry Suse, I think you had wrong information.
 
ac777233lr
Posts: 71
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 9:46 am

Quoting VV701 (Reply 20):
Now to my mind there is a very simple solution to all of this. You change the Chapter 11 Bankruptcy Protection laws so that protection is only granted if all top management leave the company within a defined period (of, perhaps, six months from entering bankruptcy protection). In Europe the EU should introduce a new law that results in the immediate sacking (without appeal) of management when any form of subsidy is given to an airline

That is a fantastic idea, I'd vote for you!
 
Sydscott
Posts: 3081
Joined: Thu Oct 30, 2003 11:50 am

RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 10:34 am

Quoting CTHEWORLD (Reply 22):
Yes, maybe the U.S. Airline industry should take a page out of the BA/SQ/QF monopoly book! How incredibly simplistic to suggest that all one needs to do is to look at those airlines.

Yeah BA is a real monopoly out of the UK/London, there is no domestic competition in Australia and of course SQ must be a monopoly......Get a grip. Nor did I suggest they look at them and copy. However a study of their operations, cost structures and planning regimes could very well be beneficial to US airlines. But of course you can think simplistically and dismiss those airlines as knowing nothing and of not being an example to follow. What do they know after all??

Quoting CTHEWORLD (Reply 22):
There are many factors that put the U.S. industry where it is, not one silver bullet. Most of the problem can be placed at the feet of the U.S. government, not the companies trying to operate in a screwed up system.

Ahem, most of the problem is fares that are too low, debts that are too high, overpaid employees, poor aircraft usage and poor management. Every industry is regulated to some degree and it's the job of executives to whinge about it whilst getting on with the job. If you don't like it then get out and let someone who knows what they are doing do it.

Quoting CTHEWORLD (Reply 22):
And BTW, the WN business model isn't scalable to international ops, and wouldnt be making money if they didn't have a hedge...they rolled the dice and won, but that doesnt mean their business model is as durable as every airline geek on this board would like to believe.

WN"s hedges are the result of good planning and good management, not a roll of the dice. But once again you dismiss any lesson that WN could teach anyone because it must have been luck that they had the fuel hedges. Whilst oil prices are this high it is rather easy to spot those airlines that have been thinking about their futures and planning for it as opposed to those that are just existing for the sake of it. No the WN model isn't scalable to International long haul operations, any halfwit knows that, but then according to all the reports I read International services are the most profitable part of the US airliness industry nowadays. It's the domestic services where the problems arise.

So at least if your going to respond again, have something midly more intellectual to say than it was all luck and no other airline can teach the US airlines lessons.
 
B744F
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 10:39 am

Quoting TPASXM787 (Reply 16):
And these new laws were sorely needed. An individual could declare a ch.7 bankruptcy, screw all their creditors, and a year later have a gleaming credit report. someone who tried to pay their bills, albeit slowly, looked like the bad guy.

So that's the only thing the law was created for?
 
Sydscott
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Joined: Thu Oct 30, 2003 11:50 am

RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 10:52 am

Quoting AC777233LR (Reply 27):
That is a fantastic idea, I'd vote for you!

That means Alitalia would have had more Management teams than Italy has had had governments!!!!!! Seriously though Eddington is consistent in not liking Chapter 11 or the bailouts of Alitalia and others.
 
Dougloid
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 11:27 am

Quoting VV701 (Reply 13):
No. But Chapter 11 Bankruptcy clearly is a subsidy.

If you have creditors and the law says you do not have to meet your obligations to your creditors and the management who got the company into its current financial state is allowed to go being paid by and running the company and (finally) the shareholders interests are put above those of the creditors then the creditors are clearly subsidising the companies operations and the shareholders investment.

You're oversimplifying bankruptcy law. It's a specialty. I don't understand it myself and I've worked in the legal system for ten years.

Quoting TPASXM787 (Reply 16):
And these new laws were sorely needed. An individual could declare a ch.7 bankruptcy, screw all their creditors, and a year later have a gleaming credit report. someone who tried to pay their bills, albeit slowly, looked like the bad guy.

Not true...I don't know what kind of crowd you run with but every client I have who took chapter 7 did it because there was a creditor who wouldn't work to resolve the issue trying to pay their bills....
If you believe in coincidence, you haven't looked close enough-Joe Leaphorn
 
Max Q
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 11:41 am

Pot calling the kettle black. BOAC and, later BA were bailed out on numerous
times and were, truly a Nationalised airline before Thatcher told them to sink or swim.

Each Concorde was sold to them for one Pound apiece, as Brian Trubshaw (the chief Concorde test pilot) said, if I had known the price I would have bought one too!

They were bailed out one last time and left in the difficult position (sarcasm)
of having a modern, paid for fleet of narrow and widebody aircraft and, while not a complete mononopoly, a lions share of the slots at the WORLDS premininent international hub.

Homer Simpson would have had a hard time screwing that up.

[Edited 2005-09-23 04:42:41]
The best contribution to safety is a competent Pilot.
 
Sydscott
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 11:58 am

Quoting Max Q (Reply 32):
while not a complete mononopoly, a lions share of the slots at the WORLDS premininent international hub

Why shouldn't they have the lions share of the slots at their hub airport in their home city?? You make it sound like BA is the only airline that has this. Is this not the case with AA in Dallas, Northwest at Minneapolis, Air France in Paris, Lufthansa in Frankfurt etc etc??

The only people that get agro at BA having so many slots at Heathrow are Americans, except AA & UAL, because they can't get in due to a ridiculous protectionist agreement that their government agreed to. Well what can I say but tough titties.
 
Max Q
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 12:18 pm

Sydscott,

I am English, so your assumption is not accurate. BA have the advantage of a near monopoly and pricing power that they have been able to take advantage of with each spike in fuel prices, although they are not alone in that regard, as you rightly state AF at CDG have a similar position, as well as other European flag carriers.

None of todays American airlines have that luxury, their market is only about price, and while there are 'fortress hubs' they are not for, the most part slot constrained and have massive LCC competition at those, or nearby airports.

Actually the American bankruptcy laws hurt AMERICAN carriers the most through the artificial life support of companies who are then allowed to undercut their healthier (relatively) non bankrupt and better managed competition, perhaps forcing them into ch11 just to compete.

In addition to a 'government' that levies an obscene tax on each ticket sold in the US, I stand by my assertion, that, yes BA enjoys an advantage undreamt of on the west side of the Atlantic, that was handed to it by the government.

Eddington likes to bleat about unfair competition, fine open up Heathrow to ALL airlines with slots awarded in an auction, pigs will fly first...
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schipholjfk
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 12:52 pm

There is no such thing as TRUE free market economy. So stop whining everyone. Every government one way or the other tries to help local companies. While CHAP 11 is not a subsidy of any type, our bankruptcy laws till recently did allow large corporations to obtain a psuedo "get out of jail" free pass. And as for Europe... is there any place on Earth that follows a more socialistic-type economy disguised as free market capitalism? We all preach the perfect world (both the US and Europeans) but we DO NOT practice what we preach. So what is the big surprise here?

British Airways can bitch all they want (and they are right!), but let's see how they do if true competition was truly present at LHR. It's all BS. A big global corporate game - hail to capitalism! That's the way it is.
The fun of flying... love it !!!
 
CTHEWORLD
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 1:52 pm

Quoting Sydscott (Reply 28):
Ahem, most of the problem is fares that are too low, debts that are too high, overpaid employees, poor aircraft usage and poor management.

Granted fares are too low, but pricing power is further eroded by taxes that are nearly 30% the price of a ticket, an archaic infrastructure, rediculous regulations on things that do not matter, and no regulation over things that do matter. On top of that certain carriers at certain cities are hobbled by strange, unevenly administered regualtions or agreements they are forced in to by the Feds.

Overpaid employees? Have you seen the payscale of employees at airlines that are coming out of ch.11? Are you honestly telling me that BA, LH, QF and SQ employees make huge amounts less than their counterparts at U.S. carriers?

Give me an example of poor aircraft usage, and I'll point to the 8 QF 747s that sit on the tarmac all day at LAX.

And while QF, BA, SQ don't constitute a true monopoly, their size and dominance make the oligopolies they operate in, look a lot like monopolies. They may not be monopolies in definition, but they certainly emulate them.
 
Sydscott
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 3:00 pm

Quoting Max Q (Reply 34):
Actually the American bankruptcy laws hurt AMERICAN carriers the most through the artificial life support of companies who are then allowed to undercut their healthier (relatively) non bankrupt and better managed competition, perhaps forcing them into ch11 just to compete

You are exactly right which is why the weaker ones should be allowed to die. Any economic consequences of the weaker dying would be negated by stronger airlines eventually filling the gap.

Quoting Max Q (Reply 34):
In addition to a 'government' that levies an obscene tax on each ticket sold in the US, I stand by my assertion, that, yes BA enjoys an advantage undreamt of on the west side of the Atlantic, that was handed to it by the government.

I don't know what the situation is in Britain, but down here more than half the cost of fuel is government taxes and charges. So when you add in security & airport levies, GST etc I am constantly surprised at the amount of money Qantas and Virgin make out of it. You can tell that careful planning and smart people are at the helms of these airlines.

Quoting Max Q (Reply 34):
Eddington likes to bleat about unfair competition, fine open up Heathrow to ALL airlines with slots awarded in an auction, pigs will fly first

Heathrow is open to virtually all airlines except those from the US subject to the availability of slots. It's not BA's fault that they are making the best of the situation. Would you insist US & DL give up their slots at LGA for an auction based on best service?? Or what about the same at ORD & DCA?? The same principle applies throughout.

Quoting Schipholjfk (Reply 35):
And as for Europe... is there any place on Earth that follows a more socialistic-type economy disguised as free market capitalism?

Since when have the Continental European countries even remotely disguised themselves as free market?? Certainly France and Italy haven't.

Quoting Schipholjfk (Reply 35):
British Airways can bitch all they want (and they are right!), but let's see how they do if true competition was truly present at LHR.

Competition is present at LHR subject to the capacity of the airport. It's only the Americans that are resentful at the current arrangement because their government was silly enough to sign an agreement limiting services. Besides which, if LHR was opened up to all the American Carriers they wouldn't be given slots they would have to buy them from someone else in an auction the same way EK, QF and others have. So there wont be a free pass in any case and good luck outbidding other carriers.

Quoting CTHEWORLD (Reply 36):
Have you seen the payscale of employees at airlines that are coming out of ch.11?

Have you seen the payscales of some prior to September 11??? They were clearly unsustainable. If we are looking at causes of airlines going into Chapter 11 then management agreeing to ridiculous wages levels is amongst the top causes. The payscales of employees coming out of Chapter 11 are virtually market rates. If the customer is only willing to pay a low price for a product then you can't expect your to pay your employees a decent wage. If airlines can't raise their prices then the employees, and therefore their spending power as part of the economy, will suffer. If you want to support airline employees then pay full fare economy and do your bit to help them.

Quoting CTHEWORLD (Reply 36):
Give me an example of poor aircraft usage, and I'll point to the 8 QF 747s that sit on the tarmac all day at LAX.

Your comparing apples with oranges. Do you know the reason why all those 744's sit on the tarmac at LAX?? Or why the same happens at LHR?? Or why the same happens in South America. Long haul flying and domestic flying are too very separate things. The growth in the number of Sat or Sunday only flights by US airlines to holiday destinations, the growth of Night flights by Southwest for example, the culling of planes by US Airways during it's first bankruptcy and then during the first part of it's second one but still maintaining its flying schedule. These are all examples of poor aircraft usage that has been corrected by scheduling changes and cutting aircraft.

Quoting CTHEWORLD (Reply 36):
And while QF, BA, SQ don't constitute a true monopoly, their size and dominance make the oligopolies they operate in, look a lot like monopolies.

I think you'll find Virgin Blue, Virgin Atlantic, BMI, Ryan Air, Jetstar Asia, Tiger Airways and others would disagree with you.
 
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scbriml
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 3:33 pm

Quoting Max Q (Reply 34):
while there are 'fortress hubs' they are not for, the most part slot constrained and have massive LCC competition at those, or nearby airports.

And there's the reason for the situation at LHR. It's slot constrained. Even if the US and UK started an open skies agreement tomorrow, I'd like to see when NW, US, DL and CO can find slots to land their planes. Why can't LCCs fly from LHR? Is it because BA controls access or because of a lack of slots?
Time flies like an arrow. Fruit flies like a banana!
 
kl662
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 3:36 pm

I think one thing that's missing in this discussion is the whole point of Chapter 11 bankruptcy. Its intent is to give a business breathing room to preserve value for creditors and save jobs. Folks truly screwed are stockholders -- typically they end up with nothing, as the creditors own the company when all is said and done. A really good summary (and rationale) of Chapter 11 can be found over on Wikipedia -- an excellent read.

In many cases, Chapter 11 works as intended. See, for example, Continental: during reorganization, it was forced to rationalize its fleet, cut unprofitable routes, and otherwise streamline operations -- all things that the other majors are scrambling to do. Of course, this isn't to say that CO doesn't still have problems, but it is one of the healthier airlines in the US and, at least personally, I'm glad it had a chance (err, chances: 1983, 1991) to survive.

However, I do find it ridiculous that UA has been in bankruptcy for so long and that US's first plan of reorganization was approved by the court and creditors when it was clearly not viable. Lenient courts, political pressures (no Congressman wants tens of thousands of jobs in his state to go away), and unique creditor situations (e.g., GE Capital) have conspired to, IMHO, abuse the process and perpetuate failed business models.

As far as the government "subsidizing" American airlines, for the most part, I disagree that there's any direct aid or overt attempts to prop up the airlines. One could argue about the loan guarantees (US, HP), but I think reasonable people can agree that the circumstances under which such guarantees were granted (9/11) are unique and, hopefully, temporary.

A more solid argument, one that Airways45 mentioned above and with which I'll largely agree, concerns pensions. Yes, United has dumped its pension obligations onto the taxpayers and, presumably, other airlines will be doing the same.

Note that the Pension Benefit Guaranty Corporation is intended to be an insurance plan for private pension plans. These pension plans pay premiums to the PBGC to fund its operations which, theoretically, should fund pension defaults without taxpayer dollars. But, clearly, the size of the airline defaults is huge and, presumably not something the PBGC can handle without a government bailout.

So, I guess my take on this discussion is that Chapter 11 isn't inherently bad (in fact, I think it's generally a good thing); Chapter 11 has been abused by United and US Airways, to the detriment of the industry; with the possible exception of the pension issue, I disagree that the government is propping up the airlines with "subsidies"; and yes, capacity needs to be reduced for a healthy aviation market.

I guess that's enough for now...  spin 
 
Doona
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 4:00 pm

I have to say that it's nothing wrong with a country's government looking out for the nations businesses. It's not the company itself it's trying to protect, but the employees. If Chapter 11 did not exist, and you would let 4 of the 6 US mega carriers fold, hundreds of thousands of people would be out of jobs, in an industry where it suddenly isn't that easy to get a new one.

I agree that it is unfair in the spirit of competition, but we need to look at the bigger picture.

And when it comes to slot allocation, if the UK government hadn't given BA it's huge share at LHR, don't you think they [BA] would figured out a way to get their greedy little mits on them anyway?

Cheers
Mats
Sure, we're concerned for our lives. Just not as concerned as saving 9 bucks on a roundtrip to Ft. Myers.
 
zeekiel
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 4:32 pm

Quoting Sydscott (Reply 37):
Your comparing apples with oranges.

Finally a bloke who knows what he is talking about.

Why is that person is going on about the QF 744's at LAX during the day? Obviously he didn't do his research.

Quoting Scbriml (Reply 38):
Is it because BA controls access or because of a lack of slots?

"Grandfather rights" is the correct term for it.

BA does not control the slots. A body known as the ACL determines the slots and who gets what. BA along with 9 other airlines and other tourism bodies fund the organisation to sort out the slot issue.

Note that none of the member airlines of this body directly benefit from their special relationship.

Cheers

Zeekiel

[Edited 2005-09-23 09:36:03]
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irelayer
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 4:51 pm

OK HANG ON A MINUTE HERE!!!!

I read that and my BS meter jumped up a few notches. I know the situation has changed with Labour's reforms and Margaret Thatcher's free-market reforms before them, but before that Britain was THE LAND of corporate bailouts and nationalizations. Before 1980, Britain's answer to a failed corporation was to nationalize it.

Rolls Royce...nationalized.
British Telecom...Nationalized.
British Airways: created from two defunct airlines and nationalized.
British Petroleum. A government owned corporation for most of its life.
BAE Systems...the same.

And the list goes on...

I'd say if you were going to harp on protectionism, you should look in the mirror Mr. Eddington. The British taxpayer has paid dearly for its state-run monopolies until recently. So don't give me us that load of crap.

Plus, do you have any what sort of mass chaos would ensue if airlines as big as United, US Airways, Northwest, or Delta just went **poof** and disappeared overnight? Businesses would be disrupted, some permanantly, the NYSE would go WAY south in a matter of minutes, whole sub-industries and airports would go bankrupt within weeks.

For the record...these are the only major US corporate bailouts in the past 60 years:

Chrysler in the '80's (still controversial, BTW).

The airlines after 9/11 (the same).

Can Britain say the same?

-IR
 
cricket
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 4:55 pm

I'm very sure that Sir Rod and Sir Richard agree on something on this. At least they agree on something  Wink
Let the market decide the fate of the airlines.
A300B2/B4/6R, A313, A319/320/321, A333, A343, A388, 737-2/3/4/7/8/9, 747-3/4, 772/2E/2L/3, E170/190, F70, CR2/7, 146-3,
 
juventus
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:12 pm

Quoting Blrsea (Thread starter):
BA chairman slams US bankruptcy laws.

I don't see how this is any of his concern. America protects its airlines
 
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scbriml
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:32 pm

Quoting Juventus (Reply 44):
I don't see how this is any of his concern. America protects its airlines

In that case, why exactly is the US concerned that the EU loans Airbus money?

In case you didn't notice, BA is competing directly with several US airlines that are currently in Chapter 11.
Time flies like an arrow. Fruit flies like a banana!
 
Adria
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:41 pm

Quoting Travelin man (Reply 18):
How does being in Chapter 11 = being propped up at taxpayers expense? Honestly, I see this statement often, but have yet to figure out what people are talking about. Chapter 11 is at CREDITORS' expense, not taxpayers.

I'm not all for lingering for years in Chapter 11, but it's farcical to say that the EU governments do not help their airlines.

See:
http://www.findarticles.com/p/articl...i_m0CWU/is_2004_Oct_11/ai_n6230704

Italian government reserves additional funds for aviation industry - report
Airline Industry Information, Oct 11, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

The Italian government's reported inclusion of EUR750m in its latest budget for "capital for companies in the air transport sector" has led to speculation that the national carrier may receive another state handout.

Alitalia has recently been granted access to a EUR400m loan guaranteed by the Italian government and approved by the European Union to undergo a radical restructure that could see the airline split into two divisions, one dealing with flight operations and the other with services, called AZ Fly and AZ Service respectively.

The new EUR750m budget allowance for aviation companies could mean that the airline receives far more than the EUR400m approved by the EU. No one from the Italian government yet commented on the purpose of this budget fund.

Talk about not letting an airline die....

yes but Alitalia is state owned, so there is a difference.

Quoting Travelin man (Reply 21):
Operating in a protected market? That is a complete joke for BA to talk about that particular subject. Heathrow is virtually one of THE most protected markets in the world, and BA has been one of the primary beneficiaries.

true, but the US also protect their market, not long ago Virgin wanted to fly domestic US routes and couldn't......I wonder why?

Quoting IRelayer (Reply 42):
Plus, do you have any what sort of mass chaos would ensue if airlines as big as United, US Airways, Northwest, or Delta just went **poof** and disappeared overnight? Businesses would be disrupted, some permanantly, the NYSE would go WAY south in a matter of minutes, whole sub-industries and airports would go bankrupt within weeks.

this is the most stupid post I've read today. So it is better to support these airlines and make unfair competition where the traveller is the one who pays more? Those are defunct airlines and if they fail, don't worry another one will fill the gap and it will probably be more efficient. Why didn't Southwest go into trouble, or why does Ryanair make good profits? Why did CX survive the SARS crisis without major problems? It is useless to support such airlines just because they are, or it's better to say, were big.
 
juventus
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 7:43 pm

Quoting Scbriml (Reply 45):
In case you didn't notice, BA is competing directly with several US airlines that are currently in Chapter 11.

What about Lufthansa, Air France, Air Canada, Aeromexico, and Mexicana? These five airlines plus BA compete against the US airlines more than the rest. What does that have to do with our chp. 11 laws?
 
BCAL
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:08 pm

Quoting Juventus (Reply 47):
What about Lufthansa, Air France, Air Canada, Aeromexico, and Mexicana? These five airlines plus BA compete against the US airlines more than the rest.

Granted that they all have a case, but this thread is about BA slamming US Bankruptcy Laws not LH etc. Perhaps Eddington (or rather Walsh) should insist that the topic is high on the agenda at the next conference of the major airlines.
MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
 
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scbriml
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RE: British Airways Slams U.S. Bankruptcy Laws

Fri Sep 23, 2005 8:34 pm

Quoting Juventus (Reply 47):
What does that have to do with our chp. 11 laws?

The whole point of the thread was BA's complaint that protection of US airlines under Ch.11 amounts to unfair competition and a form of subsidy. If that much isn't clear, then try reading it again.
Time flies like an arrow. Fruit flies like a banana!