stinsonjr

what does he have to do with UAL potentially going under?

⌐ AV8OR WANNABE

Not sure why my reply seems to have irritated you? I definitely do not have all the answers, not sure if I have any answers at all. I was just pointing out that your information regarding EU airlines being subsidized by their governments was approximately 25 years old and incorrect.

⌐ AV8OR WANNABE

I would suggest to you that an airline that has been through the chapter 11 protection, including CAL, in a sense was bailed out (subsidized) by the US government, a.k.a. the taxpayers.

Nothing personal and I'm not saying that options should not exist but a chapter 11 reorganization is essentially a bailout sponsored by the taxpayers.

…or are you suggesting that the CAL ch.11 reorganizations did not cost the government any money?

JetPiedmont

If oil keeps going up, even mergers will become difficult. Banks won't want to get involved with mergers between two corporations losing unprecidented amounts of money. For all we know, it's already at that point, we just haven't been clued in yet. DAL/NWA might still go thru, UAL/LLC may soon become a non-starter.

Another problem is, with fuel at these prices, almost all other airlines feel they have too many assets and capacity right now. Cash to buy other assets is also precious now. Cash is king.

It is a bad environment to try to spin off assets. What would UAL do? Sell it's most profitable (or least unprofitable) division or routes? Then all they have is an even weaker company, in order to sell assets at bottom dollar.

The industry, due to oil, is deteriorating at an almost daily rate. Hard to make a merger proposal to a bank for a loan when most of the cost assumptions you based it on last week are no longer valid.

757Driver

Would you care to share some hard figures on that statement?

Seems to me the creditors and the employees "sponsor" the bailout.

blastoff

Show us where there was an infusion of cash from the US treasury going to the airlines (Related to Ch 11). Chapter 11 is a law, not a tax code. If you're complaining about taxpayers paying for court proceedings themselves...there are a hell of a lot more wasteful things the government funds than the courts. If we are a society of laws, you have to fund courts.

The Bankruptcy Courts telling creditors to "take a hike" is not a subsidy.

By your same reasoning, the retail furniture industry is "Government Subsidized."

RJtrashPilot

Yeah! What blastoff said. (Pops collar and shakes fist).

⌐ AV8OR WANNABE

757Driver & Blastoff – I don’t have any numbers to share, instead I look at it strictly from an ideological point of view.

Granted, laws are there for a reason and should be followed however, I believe that our chapter 11 laws are very lenient toward corporations. In effect the laws allow them to run businesses that aren’t sustainable in the long run and once they reach the critical point they simply reorganize and give it another try and then another, etc.

So in effect even though we say that our airline industry is no longer regulated in a way it still is. Instead of getting money from the government for certain routes, the airlines routinely “delete” their obligations to their customers by reorganizing following a bankruptcy. Those customers lose millions of dollars in revenue that all of a sudden does not exist and are then unable to pay taxes on services they’d already rendered to the airlines.

Again, I do not have the solution and frankly I don’t know if this is the best or maybe even the only way to deal with bankrupt airlines – my whole point was that our airlines are not totally free from being subsidized. At least that’s my view.

fireman0174

Filing my taxes costs the government. Does that mean my tax return is subsidized? [Not the best example, but I'm tired from cleaning out my shed today.]

There's little doubt in my mind that UAL, as an example, "over-used" the chapter 11 process, but did that really cost the taxpayer?

PicklePausePull

United does indeed have some crown jewels. Best of all are their coveted overseas routes to Asia. Yet, they recently announced they cannot take advantage of the newly awarded routes from San Francisco to Guanghou due to $$$. Pretty sorry state of affairs when an airline cannot afford to increase revenue by expanding into a lucrative international market due to stagnation in the domestic market.