[Rhodes22-list] different subject - The Airline Mess

[brad haslett]

Wally,

Actually, if one of the big airlines DID go under it
would solve a lot of problems for the ones that are
left.  I have friends at all of them so its not
something I want to see happen but it probably needs
to happen.  The 9/11 bailout loans/payments were a
"feel good" solution that may have been necessary at
the time to keep the country going psycologically but
is not a long term solution.  Some of the companies
that held their hand out were plain disgusting (I
won't mention names).  SouthWest is the only
consistantly profitable airline but not for the
reasons most people think.  SWA is heaviliy unionized
and pays very well.  They differ in that their
business model is more efficient and their employees
and equipment are used more productively.  The cheap
labor costs that the 1978 De-regulation bill was
supposed to bring has not spawned a single surviving
airline that hasn't gone through bankruptcy (if you're
thinking of Jet Blue, its too soon to make a
judgement, they haven't started making payments on
their French jets yet). The new reality of the
marketplace is that SouthWest style service may seem
like First Class compared to being shoe-horned into a
regional jet.  The good times were fun while they
lasted.  Long live freight!

Brad 
--- Wally Buck <tnrhodey at hotmail.com> wrote:
> I didn't read the whole thing but I say if an
> airline(s) is going under let 
> them. If laws were broken charge those responsible.
> If they didn't break any 
> laws then I am not sure about the "street thug"
> comment. If stock holders 
> support the outrageous pay of upper management then
> they only have 
> themselves to blame.
> 
> I don't know what the answer is but the government
> needs to get out of the 
> "bail out" business. Also CEO Level pay is way to
> high with no end in sight.
> 
> 
> Wally
> 
> >From: brad haslett <flybrad at yahoo.com>
> >Reply-To: The Rhodes 22 mail list
> <rhodes22-list at rhodes22.org>
> >To: rhodes22-list at rhodes22.org
> >Subject: [Rhodes22-list] different subject - The
> Airline Mess
> >Date: Mon, 5 May 2003 08:35:40 -0700 (PDT)
> >
> >The Axis of Excess: By Joe Brancatelli
> >
> >April 24, 2003 -- You can't watch the unfolding
> saga
> >of corporate greed and malfeasance in the executive
> >suites of the Big Six airlines without immediately
> >thinking of snappy joke lines.
> >
> >You know, stuff like Monkey See, Monkey Steal.
> Flying
> >Pigs at the Trough. Or, my personal favorite:
> >Barbarians at the Boarding Gate.
> >
> >But this is not funny. While the greedy, amoral men
> >who run the nation's largest carriers are looting
> >their airlines, shareholder equity is being
> destroyed,
> >good jobs are being lost, surviving rank-and-filers
> >must bear draconian pay cuts, taxpayer dollars are
> >being squandered and the nation is watching a huge
> >portion of its airline infrastructure disintegrate.
> >
> >It is a disgusting display. The buccaneers who run
> the
> >nation's Big Six carriers are the American
> equivalent
> >of the street mobs who looted the Baghdad Museum of
> >its cultural treasures.
> >
> >There's no difference between Delta chief executive
> >Leo Mullin, who paid himself $100,000 in cash
> bonuses
> >for every $100 million the carrier lost last year,
> and
> >a street thug who stole a priceless Sumerian pot
> from
> >the Baghdad Museum. United chief executive Glenn
> >Tilton, who lived in an $18,000-a-month condo on
> the
> >company tab while the airline was hemorrhaging $20
> >million a day during the winter, is no
> >less reprehensible than the looter who carried
> >Babylonian treasures out of the broken front doors
> of
> >the Baghdad Museum.
> >
> >Mullin, Tilton, Continental bully-in-chief Gordon
> >Bethune, the current roster of fools who run
> Northwest
> >and US Airways and even American chairman Don
> Carty,
> >who these days looks more like a lost soul than a
> >master corporate schemer, are all the same. They
> dress
> >better than Baghdad street looters, but their
> >mentality is the same. They are thieves.
> >
> >The men who are running the Big Six into the
> corporate
> >grave form a repugnant Axis of Excess. Nothing
> matters
> >to them except lining their pockets and their
> >retirement portfolios. The Axis of Excess has no
> sense
> >of personal shame, no sense of fiduciary
> >responsibility and absolutely no agenda except
> cashing
> >out.
> >
> >In case your attention has been diverted by the war
> in
> >Iraq or the spreading SARS epidemic, let me give
> you a
> >brief carrier-by-carrier recap of what has been
> >learned as the Big Six have filed their proxy
> >statements, 10-Ks, annual reports and other
> required
> >Securities and Exchange Commission (SEC) documents.
> >
> >AMERICAN AIRLINES American's parent, AMR, lost $3.5
> >billion last yearand yesterday it reported a $1
> >billion first-quarter loss. After weeks of
> >negotiations, promises that executives would share
> in
> >sacrifices and threats of a bankruptcy filing, the
> >airline secured $1.8 billion in annual concessions
> >from pilots, mechanics and flight attendants.
> >
> >Then the agreements imploded when American admitted
> in
> >delayed SEC filings that it had shielded some of
> the
> >pensions of the airline's top 45 executives from
> the
> >effects of a bankruptcy filing. The top six
> >executives were also offered "retention bonuses" of
> >nearly twice their base pay to stay with the
> airline.
> >Earlier this week, Carty cancelled the
> retention-bonus
> >plan and apologized for misleading the unions, but
> >he didn't repeal the trust that protects the
> executive
> >pensions nor did he apologize for allowing the
> >executive booty in the first place.
> >
> >Ironically, American has traditionally paid its top
> >executives less than most other airlines and the
> newly
> >disclosed perks pale in comparison to the lush
> >programs offered to top officials of the other
> >carriers.
> >
> >CONTINENTAL AIRLINES After rashly promising that
> >Continental would be in the black by last year's
> >second quarter, the airline reported losses in
> excess
> >of $450 million in 2002. Last week it reported a
> >first-quarter loss of $221 million, sharply higher
> >than last year's first-quarter loss of $166
> million.
> >The airline now admits there is no chance for
> profit
> >this year or 2004, either. How has Continental
> >management reacted to the huge--and, to them,
> >unexpected--losses?
> >
> >Well, Bethune gave himself a pay package of about
> $7.6
> >million last year, more than 82 percent above his
> 2001
> >compensation. Along with stock options and other
> >perks, Bethune's 2002 compensation was $11.9
> >million. The airline's other top executives were
> >proportionately rewarded.
> >
> >DELTA AIR LINES I detailed the lavish awards made
> to
> >Delta's top five executives in a column posted last
> >month:
> >
> ><
>
>http://www.zyworld.com/brancatelli/bf2003/branc032703.htm>
> >.
> >
> >But just to recap: The carrier has lost $2.5
> billion
> >in the last two fiscal years, including $1.3
> billion
> >last year, when Mullin paid himself a $1.4 million
> >cash bonus. The excesses at Delta led Congress
> >to write some minimal rules about executive payouts
> >into its latest airline bailout package, but Mullin
> >and crew seem blind to the rebuke.
> >
> >After taking a cosmetic pay cut last month, Mullin
> >defended the airline's egregious pay packets and
> >"retention" bonuses, claiming he needed to keep the
> >executive team together. In other words, an airline
> >that lost $466 million in this year's first
> >quarter--or the equivalent of more than $5 million
> a
> >day--just can't afford to lose the crack
> >executives who are responsible for the carrier's
> >alarming cash burn.
> >
> >NORTHWEST AIRLINES Northwest was long ago looted by
> >the departed Al Cheechi and by current chairman
> Gary
> >Wilson. During the 1990s, they funneled tens of
> >millions annually out of Northwest to their private
> >companies, claiming the payments were personal
> >management fees. New management is no less abusive,
> >however. The carrier lost $798 million last year,
> yet
> 
=== message truncated ===


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