The end of the american aviation bankruptcy jokers?

[SN30952]

Until now, and probably for many years the american aviation industry will invoke bankruptcy protection.

Fiddling around with labour costs and pension founds was great american sport.
Meanwhile fuel is at more than 75$ a barrel. And that is for all the industry the same.
Unlike labour contracts, oil prices can't be tossed aside by a bankruptcy judge.
To tank up a B747-400 for a longhaul flight it costs about $101,000.

Some airlines look like Those Magnificent Men in Their Flying Machines*, throwing over board everything they really don't need to fly: some airlines pulled out ovens and anything else they could to take weight off the planes.
Saving on sanitary water and even on paint.
I suspect some airline marketing offices mulling fares for passngers that fly light: special fare for passengers without luggage. (Passengers without catering we knew already...)

Fuel is now the airline industry's greatest cost, topping labour, putting the balance more level with foreign competitors.

Once that gets level, real competion can start. I'm looking fwd what the outcome will be.

On the other hand, the more aircraft America sells to China and the Far East, the quicker it will kill its own airline companies**... The classic branch they sit on. Let me guess? In six years Yankee Doodle Dandy will fly on a chinese carrier from SFO to BOS?

And still on an other hand, the cargo fleets are aging*** on which pilots fly under extreme pressure in all weather there was one fatal crash per month on average since 2000.... 69 fatal crashes since 2000 have taken 85 lives. Is the US waiting a huge "cargo" disaster?

*Plot Outline: Sabotage efforts damage an international air race.
**As Billie Holiday sung:
Yankee doodle never went to town
I just discovered the story was phony
Let me give you all the real low-down
He didn’t even own a pony

***Many fly planes have mechanical problems, which is unthinkable in passenger flights. In US, cargo pilots can fly 40% more hours per year; they are not required to have eight hours' rest 24 hours prior to a flight, as are passenger pilots. As U.S. air cargo deaths mount, the industry remains under the radar

[earthman]

On the other hand, the more aircraft America sells to China and the Far East, the quicker it will kill its own airline companies**... The classic branch they sit on. Let me guess? In six years Yankee Doodle Dandy will fly on a chinese carrier from SFO to BOS?

And just the other day I read that the Chinese prefer foreign carriers over Chinese ones, even if they have to pay more for a ticket. Perhaps when the Chinese carriers fly in the USA, the American carriers will fly in China?

[SN30952]

And just the other day I read that the Chinese prefer foreign carriers over Chinese ones, even if they have to pay more for a ticket. Perhaps when the Chinese carriers fly in the USA, the American carriers will fly in China?

That's the exotic tpuch....
Remember the Dutch guy buying a French bread in France....
But do not worry, Chinese market is a price driven one, in the end they'll fly chinese....

[bkonner]

And the point of this post is?

[nwa757]

Fuel is now the airline industry's greatest cost, topping labour, putting the balance more level with foreign competitors.

Once that gets level, real competion can start. I'm looking fwd what the outcome will be.

What isn't level already? I don't understand this comment.

On the other hand, the more aircraft America sells to China and the Far East, the quicker it will kill its own airline companies**...

That doesn't make any sense. Are you saying that Boeing should stop selling to foreign airlines and surrender the market to Airbus?

The classic branch they sit on. Let me guess? In six years Yankee Doodle Dandy will fly on a chinese carrier from SFO to BOS?

Um.. No! I think you should do a little bit of research before posting something like this.


I don't understand what the point of this whole diatribe was.

[SN30952]

And the point of this post is?

That is as in card games, some players can use a joker. In aviation the joker card is the bankruptcy protection. American players can use it. Other competitors cannot invoke such joker.
When the level is reached where everybody plays with the same cards, without a joker, than the competion will be (more) honnest.
Until the rules are the same for all players this is a diatribe, indeed.

But we all know US are lackadaisical to clean up systems that are advantageous or beneficiary to themself. But very keen on doing that for others.

[teddybAIR]

Hm, interesting point of view!

Which American airlines are currently working under chapter 11 anyway, and for how long are they doing so? I would suspect that this cannot last forever as in the longer term this will harm the financial health of your suppliers. And frankly, if you're forced to switch suppliers when under chapter 11, I doubt you'll get good conditions...if you get any.

Regards,
bAIR

[bkonner]

SN30952 do you know what you are talking about? You certainly like to speak with euphemisms, but you do not understand how a business operates and an airline is a business! No company or airline goes into business with the goal of declaring bankruptcy! People invest REAL MONEY into a company with the hope of making a return. The people who invested into United, US Airways (twice), Delta, and Northwest lost everything. Do you understand that?

Bill

[n5528p]

No company or airline goes into business with the goal of declaring bankruptcy! People invest REAL MONEY into a company with the hope of making a return.

Quite true what you say, but that is not the point. It is a fact, that the so called Chapter 11 is an additional safety net which not all copanies in the same market can use. Therefore, it is unfair.

Even more so, that today said rules are not used for what they were designed, but as a tool of business. At some point, it does not make sense for a company to avoid bankruptcy, using chapter 11 is the easier way - and that's the problem.

The people who invested into United, US Airways (twice), Delta, and Northwest lost everything. Do you understand that?

So where is the difference to people who invested in airlines which do not have the possibility to hide unter chapter 11? Did not they loose everything? I do not get the point. It was not the point to make someone loose something (which one should generally consider as possible when investing)...

I agree with you that SN30952 could have choosen other words, but I also understand a certain level of frustration when your company might loose everything while under companies have some additional safety.

Regards, Bernhard

[chunk]

The fact that shareholders lose everything when an airline goes into CH 11 is a moot point. Why should it be any different to any other industry in which we can invest. I am quite sure my pension fund through work has taken a hit at times bacause of the stock market - so what? It's the investors choice and the investor is taking a gamble - nothing more, nothing less.

The point is that these companies are protected from going belly up by one of the most protectionist market systems anywhere. Why should those that have had to merge or cut costs in an aggressive manner elsewhere do that what the fat ar protected even when they lose 100's of millions of dollars per quarter? They shouldn;t be and if that means US Air, United, NWA or Delta disappears then sorry but tough. WHy should they be protected and say, Virgin not be in the same market?

[SN30952]

That is exactly my point, chunk. Moreover, why cant others not do the same in US?

[chunk]

I guess some are seen as 'Sacred Cows' or have very good lobbyists in the corridors of power.

[nwa757]

Eastern
Independence Air
Legacy
Midway (one and two)
National (the second one)
Pan Am
Southeast
Vanguard

All of these airlines have gone out of business during my lifetime. If ATA, Delta, Mesaba, and Northwest don't restructure successfully, they would all go out of business or be forced to merge with another carrier.

Chapter 11 Bankruptcy gives companies a chance to restructure. It doesn't protect them from going out of business.

[SN30952]

A Senate committee voted on Thursday to temporarily block a Bush administration proposal to ease restrictions on foreign investment in U.S. airlines.

That would be a way toi restructure, but foreign investment in airline industry is stopped for at least one year....
Are they waiting to see the same happen in the airline industry, as in their automobile industry?

[David747]

A Senate committee voted on Thursday to temporarily block a Bush administration proposal to ease restrictions on foreign investment in U.S. airlines.

That would be a way toi restructure, but foreign investment in airline industry is stopped for at least one year....
Are they waiting to see the same happen in the airline industry, as in their automobile industry?

Congress doesn't want too much foreign investment in the American airline market. I'm not surprise they are delaying this, as you know well SN30952, the Open Skies agreement with Europe is not something that many people in Congress favor at the moment.

[SN30952]

the Open Skies agreement with Europe is not something that many people in Congress favor at the moment.

How much is the count pro and contra? David

[David747]

I don't have an exact number, but I can tell you that a good Majority of Senators and Representatives are against the Open Skies agreement. But, then again, its an election year, and if the Republicans hold on to Congress( fftopic: lets hope they don't) they would then go back to Bush's camp in approving the Open Skies agreement with Europe. The reason Congress opposes it, its because Bush wants it and he is unpopular at the moment and the jokers in Washington want to keep their job so they are against Bush on this one(why couldn't they be against Bush when he wanted to blow up Iraq? fftopic: )

[SN30952]

I don't have an exact number, ....

You didn't give figures, but at least an explanation, which gives an insight as to actual figures will not be decisive next time they vote?

But I'm wondering what is the economical strategy behind the vote? Or doesn't that matter, as there will always be Chapter 11?

[David747]

I don't know if there is an economic strategy behind the vote, other than protectionism, the reality is, Chapter 11 can go so far in protecting some of these companies, but in the end, some will just have to go out of business.

[n5528p]

...

All of these airlines have gone out of business during my lifetime. If ATA, Delta, Mesaba, and Northwest don't restructure successfully, they would all go out of business or be forced to merge with another carrier.

Chapter 11 Bankruptcy gives companies a chance to restructure. It doesn't protect them from going out of business.

You are wrong, the world is not black or white. Of course, chapter 11 does not ttoally protect a company from going belly up, but no one mentioned that here.

The point is, an airline from Germany (just as example, you could choose many other countries) would simply not have this additional chance. Being in the same condition, a lawyer would take over by order of a court and they would sell as much things as possible to satisfy the creditors as far as possible. There is NO WAY for our Example Airways, to have some court keep the creditors away for years (yes,we 're talking about years) and invest in new routes / aircraft / equipment at the same time.

Of course, companies which insist in going bust (like the ones you mentioned above) will drown anyway - just that others will drown without having this one more lifeline.

Regarding the market access for foreign airlines: If the US does not allow this access, I would think that it would only be fair to use the principle of reciprocity any apply the same rule to foreign companies. I guess, since there should be a level playground, the US would agree to this measure.

Regrads, Bernhard