Chapter 11, the airlines and incompetance

Is it just me or do other people out there think that all the Chapter 11 section of the bankruptcy law in the USA is doing is to preserve outdated, inept and clueless airline management? It amazes me how airlines can go into Chapter 11, negotiate with those they owe money to, rip off their employees (forcing harsher conditions/pay & raping their pensions), restructure a little and then come out the other end repeating the same stupidity before, some years later, going back into Chapter 11 to repeat the process.

I can see the benefits to being able to step back, reassess and recover from mistakes, but these guys seem to use it as a business strategy. Is there any way that a company can be prevented from going into Chapter 11 more than once?

Personally, I believe that if an airline is going under, let it. There is pain in many lives but it’s a once-off thing and then everyone moves on. Here in Australia we lost Ansett Airlines and it was a complete disaster. Virgin Blue has grown to fill the gap and QANTAS have produced their JetStar group to target the low end.

It’s time the USA learned to grow up and stop propping up failing business models, idiotic management and militant unions. For a country that claims to be champions of democracy and free trade, they certainly do a lot to stop it from happening.

[updated: After having been advised of the suicides resulting from the collapse of Ansett (over 40 deaths), I’ve removed the “not the end of the world” comment in relation to the Ansett disaster]

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3 Responses to Chapter 11, the airlines and incompetance

  1. jack says:

    Your articale above went well till you were silliy enough to mention – Here in Australia we lost Ansett Airlines and it was a complete disaster, but you know what, it wasn’t the end of the world. – You have no idea how wrong you were for some, in fact many!
    Over 170 took thier own life because of what happened, yes for many getting that ‘other job’ was great, saddly for many they couldn’t coup so please how dare you say it wasn’t the end of the world.

  2. Falcon124 says:

    Oh wow – I had absolutely no idea that there were suicides from the Ansett disaster. Had I known that there is no way I would have used “not the end of the world.” I’ll modify the post accordingly.

  3. Timjackelton says:

    With respect, have to agree with with Falcon 124, but I can say with confidence that Ansett was a great airline if they were more aggressive with their International routes, that part of the show showed great potential but it all came too late, should have happened 5 years before hand, and just may be Ansett would still be around today in one form or another.

    Sadly Ansett management was a “boys club” and did not listen to the tech crews who were saying that if they did not change its fleet, to new equipment etc. then the writing was on the wall for AN. The tech crews were saying this over and over again 5 years before its collapse. At the time Ansett was a bit of a joke amongst the engineering staff from many airlines, their fleet, was always referred to as having one of everything ever manufactured.

    Where did you get these suicide figures from? I’m not saying you are wrong but I find it hard to believe. I worked very closely with AN and can also say with confidence that the real demise of Ansett was caused by the ANZ takeover. They stripped them dry, and on the last night of trading I saw with my own eyes an ANZ 737 loading spare Ansett owned engines and parts and flew them back to NZ.

    Yes it is right to say that the American Chapter 11 stinks if you are referring to the creditors, but if the airline keeps flying it does keep people in jobs and the creditors most of the time get their money back as in the case of United Delta. Bob Hawke, Sir Peter Ables and others were going to smash Ansett, for reasons other than what was stated in the press. I would have preferred a US chapter 11 styled solution to the problem.

    Simply the problem with America is that they have too many airlines, but th is changing with merger talks getting stronger and stronger. We also could talk about Alitalia in Europe, which is also a basket case and has been for years! but that’s another blog.

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