Re: Neoclassical bizarreness!!!

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Perhaps David Shemano, citing Robert Crandall on bankruptcy, doesn't
know that the CEO of Northwest alleged that Crandall phoned-- when he
was CEO of American Airlines --  to suggest what sounded to the
Northwest guy like a conspiracy.  Northwest failed to prevail in the
court case.  But Crandall knew what he was doing -- the industry needs
cooperation to control the level of supply.

   And it isn't just bankruptcy.  The Alaska Airlines MD 80 that went
into the Pacific off California a couple of years ago reflected the
pressure on the maintenance from the structure of the industry.  It also
reflected the pressure on the pilots who died because they didn't resist
that pressure.  They flew past airports because they were pressured to
nurse the ship home.

Gene Coyle

Charles Brown wrote:

> David Shemano
>
> It seems to me that the airlines were a coddled oligopoly for 50 years and
> the unions (and shareholders) were able to share in the benefits of the
> oligopoly at the expense of the flying public.  Deregulation changed all of
> that and, like the Hebrews who had to wander in the desert for 40 years to
> work off the slave mentality, it is taking a generation for management and
> the unions to adjust.
>
> ^^^
> CB: On this analogy, the airline management and unions were like slaves to
> whom in the past before deregulation ?
>
> If they were an oligopoly , weren't they more like masters than slaves ?
> So, they had to work off the master mentality and think more like slaves ,
> maybe ?
>
> Slaves to whom ? Wallstreet , so to speak. J.P. Morgan and Associates.
>
> ^^^^^
>
>
> I do agree with Robert Crandall that the ability of carriers to operate in
> chapter 11 does have a prejudical effect on the other carriers.  I am not
> sure of the solution to that problem.  There are specific provisions in the
> Bankruptcy Code that give aircraft lessors and secured lenders special
> rights -- they can take back their aircraft unless the airline cures any
> defaults and agrees to perform all obligations within 60 days after the
> bankruptcy is filed.  However, like the old joke that if you owe the bank $5
> million you are in trouble, but if you owe the bank $500 million the bank is
> in trouble, lessors and lenders are reluctant to take back their equipment
> and would rather work out a deal.
>
> ^^^^^^
> CB: Do you know where I can get in trouble with a $5 million loan ?