aadriver

Airlines: Bail or Let Them Fail?

Failure is a necessity? Is that the capitalist answer to the worst global recession since the Great Depression? I guess success is something the employees of United, US Airways, or American need not strive for. It's all about "our misery." My misery? Does United Airlines/US Airways/American Airlines very existance make me absolutely so miserable that I will cheer when they go out of business and thousands of hard-working, decent people lose their jobs? Articles like this show there is absolutely no limit what people will wish for in order to line their pockets. Shame on you!

An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs

Dan - some air lines did have hedges. I worked for American Airlines. We had hadges in 2003. When we went through our restructuring, it was later found out the executive management team built themselves a $50+ million lifeboat that secured their pensions in case of bankruptcy. The value of our hedges at the time was the same value. All of a sudden, we did not have any hedges. Any guess as to where the money went, Dan?

Airline Deregulation: Now Do It for Real

Dear BioInvestor. I had to go back to your original comment since we've had three iterations since my first fusilade.

Your original quote said that the "failure of a bad business model is what makes an economy vibrant." That is not the same as businesses successfully retooling their models or for new business models forming due to new inventions. I emphasize the "where good ideas thrive" more than "bad ideas fail."

Maybe we ought to drop the point about German unions. You brought that up in your comment as a rebuttal to my comment about the English stubbornly resisting the Germans during the Battle of Britain. My original point discussed what someone's "worth" was. We as people and organizations are sometimes placed in situations where we have to fight, literally, for our survival. We don't accept what is offered and just "move on." In addition, there have been CEOs recently who have been thrown in jail for financial shenanigans. They have almost ruined some businesses. What were they worth?

Regarding NAFTA, we first talked about outsourcing. NAFTA has directly led to the outsourcing of a great many jobs to Mexico. Fact. Ross Perot, in his "pithy remark," pointed out, rightfully, that this would happen. People who used to make a good living manufacturing cars here in the US now don't anymore because people south of the border do it - without healthcare, without pensions, and without workplace or environmental protections. I don't think Ross Perot's remark was pithy at all. In fact, I find it rather clairvoyant and extremely relevant.

Finally, your comment that you are going to "dismiss you discussion on the role of leaders" comes across as very condescending. To tell you the truth, in all my travels, I have found people around the world to be pretty much the same. Decent, just looking to have a nice life for themselves and their children.

As I mentioned, the world has countless examples of the central role leaders play in a nation's destiny. Some good, some bad. Hitler, Mao, Stalin, Churchill, Ataturk, Peter the Great - these leaders were important. Look at nations that have an absence of leaders like Somalia. Do you think Somalia will ever amount to anything without some form of leadership? The difference between our leaders and leaders of, say China, is how we get rid of ours. We vote them out. Chinese citizens cannot. Hence, US citizens have an important advantage over other nations in that we can truly change course, peacefully, every four years. If Americans are not happy with how things are going, if they don't think things are improving, they can exercise their right to change. The US is a very wealthy country. There is no reason we cannot be at the forefront in business, technology, medicine, and environmental issues. It will take a concerted effort. Having a nation of "May I take your order, please?" is not going to be the answer.

I must admit, you are a tough debater.

Airline Deregulation: Now Do It for Real

Dear BioInvestor. I don't think I misrepresented your writings at all. I believe you place undue emphasis on the destructive part of "creative destruction." I agree that failed business models do redeploy assets and spur new businesses. However, I feel that vast majority of business activity in the US is due to filling needs that exist out there. Things such as fax machines, color copiers, website construction, etc. These ideas and products did not come to us from failed business models. They came to us via people who employed their creativity to literally create new businesses where old ones did not even exist. No failure involved. I guess our difference on this point is a matter of emphasis.

Your second point is taken. I agree with you there.

I think you are partially correct where you claim taxpayers do not pay for lost pensions. Companies must pay premiums to the PBGC to insure against pension loss. That cost is passed on to the consumer. If, however, a company's unfunded pension liabilities must be assumed by the PBGC, it is possible that these total liabilities would exceed the PBGC's ability to pay for them. There was talk of a taxpayer bailout of the PBGC when United Airlines turned over their pension liabilities to them. It was a clear strain to the system. I grant you we taxpayers may not be on the hook for that yet. What I should have said is that this money must come from somewhere if that were to happen. Instead of United Airlines paying pension benefits, the PBGC would. If the PBGC runs out of money, and Congress bails them out, you and I will get the tab.

My point about unions is that they seek to improve what their members are "worth." Negotiating pay and benefits are a central part of that process. They don't just assume what management offers is OK and then "move on." Their tenacity in this process is what I was referring to. I don't quite know what your point was about German unions - they are very tough negotiators and seem to always be on strike. Yet, Germany is the leading exporter in the world and has been for the past few years. Certainly a unionized workforce has not been a hindrance. Their workers tend to be very well trained and highly educated. Call it a draw?

Regarding NAFTA, surely you jest. You mean to tell me you never heard of Ross Perot's famous quote? Or the debate as to whether NAFTA was a "good deal" for the US or not? There is a LOT of second-guessing NAFTA's benefits now. Just ask the people in Ohio. I would put to you that there has been a net loss of high-paying manufacturing jobs. Yes, those jobs have been replaced, but by lower-paying, less-skilled service-sector jobs. Not good.

Regarding your last point, I am not talking about a cataclysmic event. I am talking about a slow degradation of a society's ability to improve the lives of its people. Yes, the people of the US absolutely have been great. Unfortunately however, there are plenty of examples throughout world history where terrible leaders have absolutely ruined a nation populated by good people. Leaders are important for they guide the efforts of the many. For the US to continue to succeed, it is absolutely essential that we have good leadership to keep the ship pointed in the right direction. That means continuing to improve our educational system so that American citizens can produce goods and services whose added value makes our society more prosperous. It also means ensuring that the values of freedom and liberty remain central to our way of life. Don't get me wrong. I've been to China and I like the Chinese people. But until the Chinese government makes more of a commitment to human rights, you won't catch me cheering them on just yet.

Go USA!

Airline Deregulation: Now Do It for Real

Dear BioInvestor. I disagree. My sentiment runs counter to yours and that is why you feel is it "not called for." I do not think the economy thrives on "going out of business" sales. Ask Steve Jobs or Warren Buffet. Bankruptcies present opportunities, true, but a large amount of bankruptcies are bad for an economy, not good. If the reverse were true, then the current housing crisis would be absolutely wonderful. I would argue that successful business make an economy vibrant. I am sure the Chinese and Indians would agree.

Yes, bad business models should be allowed to flounder. However, having almost an entire industry go bankrupt indicates problems of a different nature. What would happen to our economy if ALL the airlines that recently declared bankruptcy were forced to liquidate? The economy would literally come to a standstill. Think the day after 9/11 and have it last for about a month. I would argue that the result would be a disaster. We're not talking about English weavers here.

Regarding the pension/welfare benefits - the fact is someone else will pay for them. We would be better off if these payments were as close to zero as possible. It does add up - otherwise, why was welfare reform such a hot-button issue years ago?

I would argue that there is a correlation between a strong middle class (tied to a nicely growing economy) and less money spent on welfare assistance.

People are not paid what they are worth. They are paid what they negotiate. Unions gave workers more negotiating power. That translated to better wages and working conditions. Yes, sometimes what society feels a certain job is worth is "perverse", but you don't just give up and take whatever you can get. Unions were born because someone, at some point, decided to not just "move on" - they fought for, and often succeeded, in securing better compensation and working conditions. To suggest that we should just go along quietly and take our lumps ... well ... that not the attitude that the British had when they fought the Germans over the skies of London.

Outsourcing hasn't had "a material effect on the economy?" Then what was that big sucking sound I heard after NAFTA passed? If you are willing to accept driving down wages to third-world levels, then you better be prepared with all the other third-worldisms that come it. Are really ready for Baghdad? How about Moghidishu? No thank you!

Finally, your commented that "no matter happens," things will keep improving. Are you sure? What were the Dark Ages I read about? Did things keep improving for the Mayans? Or the Egyptians? The US has been very lucky for the past 200 years because it was founded by geniuses. It was guided ever since by leaders - both in business and government - that sought to achieve a position of strength. That took a great amount of work. If do not continue to work hard to make the best, to do the best, then we will watch other nations eclipse us economically, and then perhaps, militarily. Our nation is only as strong as its weakest link.

Airline Deregulation: Now Do It for Real

I agree with mech 123 and Legacy FO. You are an idiot. Your flippant comments about not caring whether airlines went bankrupt or whether the airline makes money or not shows how ignorant you bloggers are. You just spout off nonsense without thinking about the consequences. These are REAL people who have lost their pensions and jobs. When they do that Felix, who pays for their lost pensions and unemployment compensation? Does the word "taxpayer" i.e. you and I, ring a bell? Years ago there was less government welfare because people had real jobs that made decent money. Most people who work for the airlines that I know don't drive fancy cars. They don't live in big houses and their pools are above ground. The American dream is for our children to live better than we do. Thanks to fools like you, they will be slaves to ultra-rich CEOs and Wall Street bankers. Meanwhile the Chinese and Indians will have all the civil engineers, software developers, and scientists. Then what are your kids going to do for a living, Felix? Good God, I am truly frightened that you would wish for such a world.