[photopress:DSC_3217_757_251_N516US_Northwest_Airlines.jpg,full,alignright]American airlines squeal like stuck pigs at apparently unfair competition from the European carriers and positively demand open access to China so that it will be a flat playing field. They claim some airlines are subsidized by the governments. They suggest that other countries are frightened of fair competition.
Oddly they never mention the anomaly of Chapter 11. And yet this is central to the way they operate. Four of the top seven U.S. airlines filed for Chapter 11 protection in the post-9/11 crisis.
With Chapter 11 you sort of enter bankruptcy. Sort of, because the airlines cannot be dunned for the money they owe but can still continue operating.
Then, when the situation improves, you seek approval to emerge from bankruptcy. Meanwhile, hiding behind court protection you have kept operating and seriously cut costs.
That this is blatantly unfair competition is well known but it keeps the American airlines flying.
Now Northwest will emerge from Chapter 11 where it ducked for shelter in late 2005 on the same day as Atlanta-based Delta. And, in an odd coincidence, Delta left the bankruptcy court three weeks ago.
Once a company emerges from court protection, its shares begin trading again.
‘They’re going to be in a very strong position,’ airline industry consultant Mike Boyd said. ‘They have a strong vision of what they want to do. If you’re going to bet on an airline, I’d bet on them.’ He notes that Northwest will be able to build its growth around a global hub in Detroit for access to China.
Understand these are the airlines of the United States who have been complaining bitterly about the no-fair policies of other countries, China being one.
It is like murdering your parents and then throwing yourself on the mercy of the court because you are an orphan.
In coming out of bankruptcy Northwest will be offering Chief Executive Doug Steenland $26.6 million in stock and options once the company emerges. It also gives the outgoing chairman, Gary Wilson, $2 million as well as medical and dental insurance for life and up to $75,000 a year to keep an office.
Soon they will be flying to China. Easy to spot. They are the ones with the hungry looking cabin crew.
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