WTF is the Deal with BANKRUPT Airlines?
 

I don't think that airlines should be allowed to operate if they are bankrupt...today alone there is discussion of saving three more bankrupt airlines.

"NEW YORK (MarketWatch) -- United Airlines' operating company said Monday it secured more than $2.7 billion in loans to ease its exit from bankruptcy, which is scheduled for Feb. 1.

The loan is secured by substantially all of United's assets, including aircraft, spare parts, rights to international routes and real estate."

Rest of Story Here

And then now Delta and Northwest are talking about merging.

Um...correct me if I am wrong, but the reason these large corporations are bankrupt is because they don't know how to run a successful business during times of hardship, so why should they be bailed out?!?

Because so many depend on them and sometimes it's smarter for everyones sake to help them out.

You're missing the whole point of American capitalism. Running a successful company is almost beside the point.

So nice to see you again. : )

Thanks babe. It's good to be back.

You're right, shut them all down and let everyone drive!

airlines run on razor thinn margins, try to forecast a ticket price 9 months in advance without knowing the price of petrol or being able to anticipate other costs such as security that far in advance and u will begin to understand.

Haha, don't fucking fool yourself.

Well, airline companies such as Southwest have their oil price locked in for five years. So when they give that bitch, doesn't work.

And I have done more research on the airline industry than anything ... if they run on such low profit margins, then why does SWA thrive so well? Oh that's right, they don't bend the customers over. Keep running on a thin profit margin and get repeat customers ... that's a business model that seems to work currently.

I will NEVER fly Delta or United again, all because of their retarded rules and fees. Had you not been greedy and try to charge me $25 for a bag that 2 years ago would have never cost me anything, I might fly them again.

This is true but it's only one business model. You can see this in our own industry. I call it the one night stand versus relationship business model. You can fuck a lot of people once or a few people a lot of times.

companies like skywest and southwest have done pretty good while older airlines stuggle. there needs to be consolidation in the industry.

the only ones making profit here in Europe are the low cost airlines, ryanair for example just keeps giving away hundred's of thousand's of seats every year, and then selling the same ammount of seats for between 1-10?, and still they make profit...
When SAS announced how much money they had lost over the year Ryanair had an ad in the paper saying they were giving away seats totalling in the value of SAS' loss :1orglaugh

a problem with a lot of the big airlines is they have older jets that aren't as fuel efficient. so they're affected even more by rising oil prices. thats not even mentioning their poor business decisions

Umm, no ... sorry. Yes, some have older planes but one large problem was that before and after 9/11 the big airlines went out and bought huge, new planes. The new Boeing that is coming out is sure to fit a king ... but if these airlines can't fill up their seats now, what are they gonna do with this big new jet?

yer gonna need to provide a link to that before i will believe that.

u really have no idea what u are talking about

seriously, u do understand that aircraft have a lifespan + older jets are waaayless efficient than newer ones and the larger new jets PER SEAT are cost effective, more so than any old jet

That was the school bell ringing right there...good one Kris.

There are a tons more, but here's another good one:
http://www.usatoday.com/travel/colum...grossman_x.htm

you're assuming they replaced their jets with new ones...

from the article::

one quarter = 4 months, not 5 years, my original comments still stand

See the second link I posted.

Hard times ? like 1/3 less customers, 2x the gas price... let's say that cuts the profit marging a lot

I'd agree that many of the airlines in the US are in serious financial trouble. However -- alot of these airlines got to this point due to union contracts, coupled with 9/11, something that no one could have foreseen.

Running an airline that flies both domestic and international routes is alot more risky, which is why Southwest doesn't fly international and America West had nothing but Mexico and Canada (fairly recent additions as far as history goes) and didn't fly Hawaii on their own. Amwest is one airline that came out of 9/11 in a much better cash position due to government subsidies... had it not been for 9/11 they might have folded.

Southwest, for instance, flies one type of plane. The Boeing 737. They give you the bare minimum in amenities, they don't do assigned seating, and their planes don't sit on the ground for long since they are a point to point airline and not based on the hub system.

Airlines also have areas where they are dominant -- Delta, for instance, in Atlanta and most of the Southeast. To say that they shouldn't be allowed to fly because they're bankrupt is crazy. Tickets to Delta dominated areas by other airlines would be prohibitively expensive since there would be no competition in that market.

Look at Dallas. Dominated almost entirely at DFW by AA (especially since Delta dropped their hub there to save money), and re-enforced by that stupid Wright Amendment that AA got passed years ago to keep SW out of DFW.

Any time airlines stop flying, it's a loss for anyone that flies on any airplane.

It's sort of like billers in the adult industry... when one goes down, for whatever reason, the fallout in new card association rules, fee structures, etc has a negative impact on the entire industry.

Yes, businesses, including airlines, should be run like businesses. Bankruptcy is a common thing in big business, Chrysler did it, Levitz Furniture did it, many companies do it. For their creditors, its sometimes the only way they will ever see pennies on the dollar for what they are owed, since they write down the bankrupt accounts, extend tighter credit with higher prices on new goods and services, and hope to recoup some of the old money along with the new...

i read that one too and see your point- to a degree.

sw is not the typical airline, their liquidity built up over the years has allowed them the luxury of hedging somewhat. but my original point still stands-

the lion's share of the air travel industry runs on razor thin margins and huge equipment costs + forecasting supply costs waay in advance.

sw is the the primary exception

southwest bought a bunch of oil futures before oil prices shot up. i forget the actual numbers but its going to save them a ton over the next few years. i believe most were locked in until 2010 their ceo said.

i'm sure if you wanted to look around for it, all that info is discussed in their 10k

dont get me going on airlines, I got charged $100 coming out of Vegas for being overweight, one bag 5lbs over the other 7 lbs, They just lost all my business and can stick their airmiles where the sun dont shine.

Denver is a hub for United, now that SWA has started to service Denver, I forsee many beginning to use them. They have 2 leased gates and hope to expand further, the response out here was overwhelming. When SWA began, they were ridiculed for the generalized seating, no food, etc. Now, they have food when all other airlines charge for it. Their generalized seating does not seem to bother too many. Actually, on an odd note, more marriages have started this way from SWA ...

Anyways back to Denver and it's "hub" ... it fucking sucks. They have it set up so you have to check in yourself at the kiosk, but have the counter staffed and if you need help or a bag checked, you better hope you get it done 45 minutes before your flight or you aren't getting on.

Yes, other companies have gone bankrupt and I don't think it's that great of a choice. I think they should be forced to change their business model or show some type of growth or change before more help is given to them.

I guess you made my point ... If you go bankrupt and see another airline succeeding, why not mirror their service?!?

I see large corporations such as airlines going bankrupt and being saved. Why is it they can continue their same business model, why not change to having tickets transferable to another person? Southwest offers you to change your ticket if the price is still available, no additional fee. Why don't others do that or only charge $25? It's all a greed factor. Meanwhile the CEO's still seem to be laughing to the bank.

Denver's 45 minute policy on bag check is due to the size of the airport and the fact that they simply can't get bags to the planes if they cut it any closer. ATL and a couple of other airports are set up the same way. There's no reason at all for an entire plane to wait for someone who couldn't get to the airport on time (and yes, everyone that knows me knows I'm the worlds worst for being late to the airport, that's why I don't check bags). Flight scheduling is one of the most complicated things on the face of this earth, especially with alot of airports like Vegas having a completely full runway schedule during their entire operating hours. When planes don't take off on time, they back up the entire system, since there are only so many gates and runways to use at any given moment.

SW has two gates in Denver, great... ( I just realized you guys aren't in Vegas any more either) that means they can fly 3 departures per hour or so if they can manage their 20 minute on the ground schedule they project for most of their planes, given that Denver's not the best in weather part of the year.

Don't get me wrong, I'm not picking apart your arguments because I'm bored, and I don't fly on United. I'll change planes or fly SW if it's inside Cali to stay off United. I only fly AA when there's no other choice.

Delta used to be the best airline coming and going, especially when they were still a non-union shop. It's sad to see what's happened to them.

Reasons for bailing a major corp out of trouble:
1) they provide jobs, so keeping them in business keeps people working which keeps people out of unemployment lines/welfair.
2) to make sure that other companies do not get monopolies and start driving up prices.
3) Keeps a large taxable corporation out there generating more money.

Basically the government is investing in a business that has a legal obligation to pay them back on their investment plus money on intake. You can either pay for them to do this with tax money or you can have it come out of your pocket by paying taxes to go to their laid off workers or in rising airline tickets when they do not have to compete as much, the government is not going to start up an airline, this is capitalism at its finest.

Ding-ding-ding-ding!

I was there well before 45 minutes ... and then had to rebook my flight to NY totalling $1250. I was pissed. And I'm not asking anyone to wait for me ... take off and go if I'm not there.

But that's still beside the point ... I guess I don't see your argument Kimmy. You are saying you don't check bags and only fly AWA?

SWA does have a hub in a sense with their acquisition of ATA. Midway is packed and has so many layovers for SW flights.

And we haven't been in Vegas in years! ; )

its inefficient if they don't change the business model. its like GM, they need to do far more than cutting some costs here and there. if a company has to go bankrupt then cut the losses so others can be profitable. if that means rising ticket prices so be it, it gives smaller airlines a chance to steal even more market share.

You people are fucking morons.. Has nothing to do with the Airlines "going bankrupt"

It has to do with the contracts. The people that own the planes/fuel/ect The airlines want cheaper deals the contracted owners tell them GFY...so the airlines say fine I am fileing for chap 11. Here are your planes back.. Then I am going to start my business over again. We can re negotate a new contact.. For planes/fuel/unions ect


Why do I know this? My dad is a Pilot for a major airline

I feel extremely sorry for your dad ... they are the ones getting hurt the most in all of this. Losing everything for retirement that they worked so hard for and taking such huge paycuts.

Some airlines have outsourced flight attendents, no lie.

Those giant union contracts are half the reason that these airlines can't stay financially solvent.

http://www.consumeraffairs.com/news0...ankruptcy.html

http://www.cbsnews.com/stories/2005/...in694687.shtml
"Strike threats, while rarely carried out, are particularly powerful bargaining weapons in the airline industry since they can put carriers out of business if employees walk for any length of time. Even the hint of a strike can be costly to an airline in terms of lost bookings."

http://www.wsws.org/articles/2005/jan2005/air-j12.shtml

SAS is a good arline though just a bit expensive but they really take care of there customers.

oh i never said it was "right" i said they were reasons behind it. The government will continue to bail out large corporations like this though. They are not going to step in and regulate the industry because people will not stand for that level of governmental control nor are they going to create their own version to increase checks and balances, so throwing money at it is the easiest solution. As far as GM is concerned it has been said that all they have to do is fire the retired CEO's :1orglaugh

In large business, neigh in ANYTHING if there is no reason to try hard or not penalty for failure, why worry about failing other than personal pride/honor code which we all know is not a big issue in big business. Shit just look at how the comparative chump change around here has people stabbing each other in the back and doing anything for profits

They've had so many unreported accidents over the last few years - probably because of cuts in maintenance. I will not be flying with them until they get their reporting system up to international standards. Seems the government lets them get away with giving misleading information despite consumer demands to be able to understand what their accident reports actually cover.

US airline industry is too regulated. Int'l carriers can't fly between US airports except on specific routes with special permission, situations exist like SW in DFW, like KimmyKim stated.. pretty anti-competitive. A lot of cities are like this.. Carriers who offer good customer service and are not overly bureaucratic seem to be profitable. Same with the car companies. There is a reason Toyota is profitable and GM is not..