Star Tribune - Plagued by record fuel prices, high labor costs and enormous debt, the Northwest Airlines board of directors will meet today to decide whether to file for bankruptcy for the first time in the company's 79-year history.Though this is not entirely political in scope, I think that there is some bearing here.
Northwest said Tuesday that no decision on whether to file for bankruptcy had been made, and analysts, while agreeing that a bankruptcy filing might be inevitable, said today's meeting could be one last effort to pressure workers to accept steep pay and job cuts.
'They have a very realistic possibility of being forced to file for bankruptcy, but not necessarily [today],' said Michael E. Levine, a former executive at Northwest and other airlines who is a research scholar at New York University School of Law.
Northwest, like most big airlines, has wrestled with high fuel and labor costs and growing pressure from low-fare airlines such as JetBlue, Southwest and AirTran. Two of Northwest Airlines' rivals -- United Airlines and US Airways -- have entered bankruptcy in recent years. And Atlanta-based Delta Air Lines is widely expected to do so this week.
The big airlines are all having problems and they're asking for government bailouts (not all, but lots).
Tough.
Perhaps what we're seeing is that the market cannot support massive carriers. This is where I become a free market proponent: smaller carriers seems to be doing fine (look at Southwest, the smaller airline that locked in gas at GREAT prices). Maybe the big carriers need to fail. Does this mean that you couldn't fly from the East Coast to the West? No. A carrier will still provide that, maybe someone smaller, and if it is profitable others will do so as well. Competition is funny like that.
Here's the downside, though, and for this, I don't have an answer: pensions. If the big carriers go under their pensions may have to be paid for by the federally insured pension insurance company (I don't recall their official name offhand). That means that you and me and every other taxpayer would be footing the bill for the pensions of these former airline employees.
I'm not economist and I don't know the intricacies of tax law and such, but it would be nice if there was a way to break up the big carriers into smaller carriers that still paid the original pensions.
Any thoughts?
2 comments:
Sidebar: Airlines seeking concessions. Why do they always go after the pilots and mechanics? Sometimes looking for up 50% pay cuts. Um, sirs, over pay them please! The last thing I need are the people who make sure the engines work and their partners who make sure I take off and land where I am supposed too pissed off and thinking about his mortgage.
I know pilots and mechanics are paid well, but I say GOOD! Just like you Sean, I would prefer my pilots and mechanics be able to fully concentrate on the J.O.B.
I think flight attendants will get cut back more and more. It's not like they give much out anymore anyway. Remember that flight from Chicago to Portland. We had time for A beer. What's up with that?
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