Posted: Sat Sep 25, 2004 9:46 pm Post subject: US Airways: Could Liquidate Without Cuts
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That gain would likely enable US Airways to keep flying through March, if revenues during the typically slower winter travel season did not slip below projections and fuel prices did not rise, the company said.
Without new cash over the next few months, US Airways warned it would probably have to severely downsize and possibly be forced to liquidate in February. The company expects to lose $600 million this year.
DALLAS (Reuters) - Most U.S. airlines, trying to offset record high jet fuel prices, have boosted air fares in North America by as much as $10 on round-trip flights.
Most of these airlines are doomed. Using Chapter 11 to continue trading is just causing good money to be thrown after bad. The employees now realise that the only choice they have is either the quick death of liquidation or the slow death of a thousand pay cuts. I am not at all surprised that the older pilots are cashing in their retirement chips and trying to save what money they can. The CEO's who continue to run these businesses knowing that they have no chance of success are simply immoral. They are robbing investors. I assume that their reason for keeping the airlines going so that they can continue to draw their own inflated remuneration. At least if the companies were wound up they would find themselves out of a job along with everyone else.
Would those court ordered pay cuts affect the CEO, and other senior executives?
According to a recent article in the Philadelphia Enquirer the directors and executives of at least one of the struggling airlines have decided that they should be exempt from the pay cuts being suggested for the rest of the staff.
The argument appears to be that they already earn less than their counterparts in the low cost carriers. Of course what they neglect to mention is that some of their competitors actually run their businesses better so may actually deserve more remuneration.
US Airways has now been in Chapter 11 twice in the past few years. The fact that it was allowed back on the street to frisk more investors of their money suggests that the bankruptcy system may be in need of an overhaul. At the very least the people who mismanaged the business should be removed from their posts before any restructuring commences.
Did a little checking and found that for every $1 gain in crude oil prices it adds $280 million per year to the U.S. airlines' fuel bills. With the price of crude going up like it is, we are talking some serius cash right now. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Hey, what's a 23% cut in pay amongst friends? Piece of cake...
US Airways warns it could collapse by Feb.
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Unless employees take pay cuts, the airline said, "material downsizing, massive layoffs and potential liquidation by mid-February 2005" could follow. The information was contained in a filing in which the airline asks the court to cut employee pay by 23 percent, unless it can reach agreements with labor unions.
Joined: May 24, 2004 Posts: 3428 Location: California, USA
Posted: Tue Sep 28, 2004 10:33 pm Post subject:
Hey, don't worry, be happy. If laying-off thousands of workers is supposed to make companies stronger, then by extension, going bankrupt makes them invincible! With that kind of logic, comes a new way to win the war in Iraq: just drop bombs on our own troops, and the more of our own troops we kill, the more we're winning!
Re. executives who say they should be paid more because "they already earn less than their counterparts in the low cost carriers."
That is a Welfare Mentality if I ever heard it.
First of all, they're not saying they should be paid more because they did something particularly meritorious for any of the constituencies an executive has to serve (the shareholders, employees, customers, or the nation at large). That is, they're not saying they should be paid more because they *earned it* i.e. *did* something to justify it.
Note here that the words "earned" and "did" are variations on the verb form "to do."
Instead, they are saying they should be paid more because someone else is being paid more. Someone else who is not in their company, i.e. not in their chain of command. Someone who they do not report to, and who does not report to them. Someone who they have no responsibilities to or for. More to the point, in business, someone they should be competing with.
So it's not "I deserve more because I *did* something," it's "I deserve more because *someone else has more.*" This is a basic logic violation, i.e. the word "because" ("this *to-be* is a result of that *cause*", see also about "to-be" verbs below) is an improper usage; there is no actual causal connection between the other airlines' executives and the ones asking for more.
It's also equivalent to me saying "I want a new car because my neighbor got one!" Or, to use a more apt example, your 7-year-old demanding to have an expensive toy "because" someone else in his third-grade class has one. Whine, kick, scream, and throw a tantrum! What do you do when your kid does that?
Logically, "I want because he has" is predicated on the subtext of "I'm as good as he is," which in turn is predicated on the subtext "I'm good," i.e. "I *am* good." Note the verb here. Not a form of "to do" but a form of "to be." There's a word for demands based on the verb "to be." It's called "entitlements."
The core of the concept of entitlement is the replacement of the formulation "I deserve because I *do* something" with the formulation "I deserve because I *am*." In other words, the replacement of the work ethic with the entitlement ethic. This is the core of what we criticize in chronic welfare-abusers. The stereotypical shiftless types who feed at the public trough and get offended when anyone suggests they get off their butts and do something productive.
What's good for the goose is good for the gander: everyone has to play by the same rules; therefore if entitlements are wrong at the bottom of the heap they are also wrong at the top of the heap.
Next, these guys are passing the buck. Rather than taking responsibility, they are shifting it to others. This is simply immoral: it violates the principle that legitimate power carries responsibility in equal measure. A captain has command authority and also has responsibility for his ship; you can't have one without the other. In military culture it is grossly dishonorable to commit a command failure and then blame it on subordinates; even in civilian culture it is (or perhaps "used to be"?) dishonorable.
I would like to see these people stand up on national television and say, "I exempted myself from sacrifices that I expect of others." On the other hand, I suppose they can say they're only following President Bush's example from the Vietnam war.
Last but not least, the excuse about executive retention. "If we don't pay these people what they're asking for, they'll run off and work for someone else." Fine. If you don't get a spoiled 7-year-old the expensive toy his neighbor has, he might threaten to hold his breath until he turns blue. What does that say about character...?
So let the spoiled child hold his breath, it isn't going to kill him. And let the spoiled executives run off to "somewhere else." I've always believed in the old tradition of promoting from within, and chances are there are many qualified candidates who will go the job and not complain that the neighbor has better toys. They might even have the honesty to talk about oil prices being a factor, and then if all the airlines do that and raise prices a little, they will all be on a sounder financial footing.
I also heard from an airliner that they had a contract for cheap oil for the next two of months. They apparently buy oil outside the public market. If the prices haven't come down after that they are in big trouble.
Yesterday there was also an interview with a spokesman from the car industry at CNN. Apparently they are also in dire straits. Their energy costs are going through the roof. Raw materials are skyrocketing and they can't pass these costs on to the consumers because of global competition. Seems like some of them have to close their doors in the next few years.
Accidently I heard similar complaints from Michelin. It has gotten a lot more expensive to manufacture tires.
It took some delay but I guess the industry is now starting to feel the burden of the high oil prices, so I think a recession is in the making.
No. French suggested that name in in the conference that drafted the constitution, and reception was les than enthusiastic.
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Or will Russia and the rest of the CIS join the EU, EC or whatever they're calling it nowadays. Then the Russians will really sell all their oil in EUR.
We call it EU, short for European Union that was established by the Maastrich treaty IIRC, but also EC still exists - the "acquis communaitaire" is not easy to understand and even more difficult to explain. If the Constitution gets approved, we'll get rid of the acquis (or most of it) and there will be only EU.
Russia not in the conceivable future if ever. Moldavia, Ukraine, Belarus, Armenia, Azerbaidzan and Georgia perhaps after few decades if they are willing, get their act together and do what it takes to become a member. Russia is too big and powerfull, and there's still too much hostility and mistrust towards Russia especially in the eastern parts of Union. Russia stays megapower because of nukes, oil and permanent seat in SC, and will keep wielding greater influence alone than by sharing sovereignity (and resources!) with EU-members. That does not mean that greater level of cooperation would be unlikely, EU and Russia have lots of shared interests. Especially continental EU, but it will be interesting to see what effect becoming net importer of oil will have on UK's EU policies and attitudes.
Much depends on the vote on constitution. Unless the referendum fails also in France (which is unlike, but possible for the opposite reasons to UK, seen as not socialist and federalist enough), no-vote in UK will lead to UK resigning from the Union immediately or being left on the side-track towards slower de facto rather than de jure resignation, depending on how the referendum question is posed. France and Germany and many others will have only limited patience towards UK obstructionism and exceptionalism.
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Besides, some of the European countries *did* make noises about wanting to setup some kinda defence arrangement separate from NATO. Which got USA all spooked up.
Yep, and much more than noises, it's going ahead full throttle. Most of the suggestions (or threats ) of France, Germany, Belgia and Luxembourg are becoming reality. UK, facing no other option decided to jump aboard, achieved some compromises and succeeded in putting enough make-up on the EU defencive co-op to make it look not a threat to NATO and more acceptable to US. Naturally this development will have it's own logic that can't be stopped, and NATO will sooner or later become a two-pillared system, if it survives at all.
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"Oceania, Eurasia, and Eastasia" - sound faimilar, huh?
The leaders of the western world appear to want power and wealth without any responsibility. Their lack of any trace of nobility is why our civilisation is on the road to ruin.
Looks like another airline is soon to bite the dust.
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US Airways and United are both struggling to emerge from bankruptcy, while others, such as Delta Air Lines, have warned they could soon file for Chapter 11 bankruptcy protection unless costs start coming down.
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Early in 2004, with the worst of the SARS fallout behind it, IATA dared to forecast a $3 billion profit for its members over the year. But oil soon clouded the outlook, and IATA predicted a $4 billion loss for the industry weeks before light sweet crude crossed the $50 line on Sept 28. Analysts say the biggest victims could be airlines that find it difficult to raise fares - like major carriers in the United States, where overcapacity and cutthroat competition prevent higher fuel costs being passed on to passengers.
In a day of dire news for the US aviation business, American Airlines - the country's biggest airline - said the high price of oil meant it was raising its fuel surcharge.
Its customers will now have to pay a $50 fuel fee for trans-Atlantic or trans-Pacific return flights, up from $30.
FYI also
a couple of hours ago the US Air (forget what it's named today), announced a 21% pay cut for employees. I dont have the link sorry it scrolled off! ><
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) of France, Germany, Belgia and Luxembourg are becoming reality. UK, facing no other option decided to jump aboard, achieved some compromises and succeeded in putting enough make-up on the EU defencive co-op to make it look not a threat to NATO and more acceptable to US. Naturally this development will have it's own logic that can't be stopped, and NATO will sooner or later become a two-pillared system, if it survives at all.
