Trolley Dolley
Topic Author
Posts: 548
Joined: Sat Jul 29, 2000 1:57 pm

What's The Most Unstable Airline Alliance?

Fri Sep 10, 2004 5:33 am

I was wondering what the feeling out there on the next airline alliance to be put under major pressure from losing a key member?

Oneworld is small and has not been able to join up Swiss. Aer Lingus are also looking at leaving, according to Irish media reports.

Many of the airlines in Star are under extreme financial hardship, the situation with UA and US, SAA (Future Star member) has suffered huge exchange rate losses and Varig has huge losses as well. Bankruptcy is a real prospect for the latter two as well. Star is also growing so large, will it have anti-competitive penalties or restrictions placed on it?

Skyteam's key member, Delta is also facing bankruptcy.

Which alliance do you think will take the next hit?
 
SafetyDude
Posts: 3654
Joined: Fri Sep 07, 2001 10:02 am

RE: What's The Most Unstable Airline Alliance?

Fri Sep 10, 2004 6:40 am

In terms of being "stable", they are all fine, even with members possibly leaving.

-Will
"She Flew For What We Stand For"
 
N863DA
Posts: 1140
Joined: Sat Sep 04, 2004 6:36 am

RE: What's The Most Unstable Airline Alliance?

Fri Sep 10, 2004 7:13 am

NO, No no no.

This is not aimed at you personally, but it is about time that the flying public (and the minority of people on this board, also), grasped the concept of Bankruptcy and its lesser evil, Bankruptcy Protection.

Chapter 11 is the Protection by an act of the courts FROM Bankruptcy. This allows the company (usually airlines, in our line of work), to realign finances without having to pay fixed costs associated with long term debt, and anything else applied for within the Chapter 11 Application. This is NOT bankruptcy.

Chapter 7 is the act of liquidation of assets. THIS is Bankruptcy. This is where the company ceases trading (at least in its current form), and debts are paid back to creditors with the proceeds from asset sales used to repay such debts.

...meanwhile, back on topic...

But in terms of alliances, oneworld is probably the least integrated and the one with the most tension between partners. In the same vein, however, the sheer number of members of Star must make some integration issues tough.

Regardless, my personal belief is that, largely through lack of integration between partners (with the notable exception of agreements between British Airways and Qantas), oneworld is the least stable of the, "big three" airline alliances.

At the other end of the scale, I would have to say that SkyTeam, by its very nature of tightly-controlled integration, is likely the most stable of all the alliances, built on firm cooperation between not only two, but five, major global airlines.

FLY DELTA JETS



N 8 6 3 D A
 
Trolley Dolley
Topic Author
Posts: 548
Joined: Sat Jul 29, 2000 1:57 pm

RE: What's The Most Unstable Airline Alliance?

Fri Sep 10, 2004 1:24 pm

The reports I read in Flight magazine specifically mentioned Bankruptcy for SAA and Varig.

Also chapter 11 etc only apply to US companies. Granting of Chapter 11 is no guarantee that a company will emerge to continue trading. Any airline in Chapter 11 faces the real prospect of bankruptcy.

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