Liquidation is not the answer for United Airlines

Mr. Farzad is obviously a product of his generation. Everything is disposable, even people. His solution is the lazy man's way out of everything. We see it in banking as well - got a problem? Lay it off on someone else.

Not a good way to run an economy, a country or a life.

Dick Weil

I am really getting tired of hearing about troubled UAL. Lets share the complaining on the other troubled airlines too.

who is this clown? What does he know about an Airline.

It sounds as if he just writes his personal opinion without regard for the truth. I will be sure to NEVER listen to anything he writes again.

Who is this clown is right! What makes him an expert on the airlines?

Employees would not benefit? The employee base of the entire industry – including United – has been decimated by job losses and wage cuts over the last few years because our screwed-up bankruptcy code creates barriers to exit that perversely reward and preserve management of the weakest industry players. And all for the benefit of bankers, consultants and lawyers. If one of the legacy airlines had simply shut down during the last downturn, it would have solved the industry’s problems in one fell swoop. The employees of that airline would have suffered, but the rest of the industry would not have been hobbled by the weakest players emerging with the cleanest balance sheets, dragging everyone down. Management and labor at American sure look like suckers for being grown-ups and making the difficult choices to avoid insolvency. Now the managers at Delta and Northwest, who led their companies into bankruptcy, get rewarded by having the balance sheets and cost structure that allow them to create the largest airline in the world. And United, even with those same advantages, still can’t get it right.

The answers to the problems in the airline industry are simple. Remove barriers to exit in the bankruptcy code and let weak players die. Let markets reward winners, and the results will be unsurprising.

Employees would not benefit? The employee base of the entire industry – including United – has been decimated by job losses and wage cuts over the last few years because our screwed-up bankruptcy code creates barriers to exit that perversely reward and preserve management of the weakest industry players. And all for the benefit of bankers, consultants and lawyers. If one of the legacy airlines had simply shut down during the last downturn, it would have solved the industry’s problems in one fell swoop. The employees of that airline would have suffered, but the rest of the industry would not have been hobbled by the weakest players emerging with the cleanest balance sheets, dragging everyone down. Management and labor at American sure look like suckers for being grown-ups and making the difficult choices to avoid insolvency. Now the managers at Delta and Northwest, who led their companies into bankruptcy, get rewarded by having the balance sheets and cost structure that allow them to create the largest airline in the world. And United, even with those same advantages, still can’t get it right.

The answers to the problems in the airline industry are simple. Remove barriers to exit in the bankruptcy code and let weak players die. Let markets reward winners, and the results will be unsurprising.

Good points Dave, and certainly a good case can be made that the industry's woes have been amplified by the use of the bankruptcy code. But I stand by my comments that employees would not benefit from being out of a job. Perhaps down the line it would create a better industry (although considering United is not alone in its troubles I am skeptical that a United failure alone would change any of the problems you have identified), but considering the state of the industry it is hard to imagine anything but a career change for most of these workers, so I don't see how they would benefit.

To Dave, Lou and others,

Indeed, Dave, you and Lou both make good points. I had been in the airline industry for 10 years when family issues forced me out. I can agree with the basic premises being bresented by Dave. Letting those airlines who are stronger prevail and let those with financial problems stemming from poor management fall by the wayside.

It is not a pretty solution, but it is the only fair one and the only one that will work without government stepoping in to once again completely regulate the industry--we still operate under partial regulation by the government regarding routing and market choice for the various types of carriers operating in the U.S..

Had our legal system not been so pro-big business and so eager to grant every whim of the management of today's airlines, we might well find higher prices for seats to compensate for higher fuel costs, but we would have a much stronger industry still operating under an essentially free market economy. As things stand today, management is rewarded with bonus after bonus for hiring high priced legal firms at extremely high rates to convince a judge that the empoyees are the ones who should give up their legal contracts and pentions in order to keep a much smaller minority of shareholders happy and earning profits. And, who pays the price for their bonuses in the end? The U.S. tax payer when the bill comes due to cover the pention plans that these airlines have been alowed to default on.

Now, I ask you all, if our legal system did NOT reward poor management practices, do you think they would continue? Absolutely not. However, until there is a new order in the government, and within our culture in general, where those doing the work are rewarded for their labors and those who simply manage and manipulate the resources of our companies and our country for their own gain are held accountable, there is little that will change, regardless of whether or not United Airlines is allowed/forced to file for liquidation. We have asked for what we have in our leadership, both at the corporate level and at the gonvernmental level. We are now, unfortunately reeping what we have sown.

Yours,

Lee S. Coles