Can I Expect My Stock Certificate In The Mail Soon?
by Joe?Pulcinella
According to the WSJ, we are all proud owners of US Airways. So can I sell my share? Not so fast, bunky. We've inherited tens of billions in debt (again) so don't go Jack Welch on us just yet. This article is a hard-hitting testament to the bungling that partial-regulation (read: RE-regulation) causes. But why can't a huge airline that charges you out the wazoo keep afloat? The reasons are straight oout of Dr Suess.
Consider the Railway Labor Act, the law governing airline union negotiations. The immediate cause of US Air's "Chapter 22" filing (that is, Chapter 11 twice) was the refusal of its unions to accept necessary cost reductions. Though high labor costs are the well-known core of airline struggles, there's little management can do short of entering Chapter 11 to reduce them. The 1926 Railway statute gives unions extraordinary power to wait out the bargaining process and threaten a strike that no airline can survive. Last year Arizona Senator John McCain considered reintroducing his proposal to amend the Railway Labor Act to allow best-offer binding arbitration, which would encourage serious negotiation. But Republicans deemed it too politically difficult.
Gee, for some reason, Congress, who can pass a new tax in a New York minute can't seem to amend (or repeal!) an outdated labor law which was stupid from the start back in the twenties.
Want more? There's the question of why airlines are nearly alone among U.S. companies in being forbidden from tapping foreign capital. How come the Department of Transportation takes such a hard line on airline alliances and code-sharing agreements that would also reduce costs? And when, if ever, will the government finish the job of airline deregulation begun under President Carter in 1978 -- relinquishing its role, for instance, in running the inefficient air traffic control system?
The entire article is a must-read. Especially for anyone who still thinks that bringing the airlines back under the protective wing of Mother Congress is the answer.
How about this quote; "Last year Arizona Senator John McCain considered reintroducing his proposal to amend the Railway Labor Act to allow best-offer binding arbitration, which would encourage serious negotiation. But Republicans deemed it too politically difficult." So let me get this straight - the most "moderate" Republican in a government controlled by a Republican majority thinks it is "too difficult" to pass a bill to reform a wacky, outdated, and irrelevant (Where is the word 'airline' in 'Railway Labor Act'?) piece of legislation that is strangling a vital industry? What good is a Republican majority when they can't even pass a good Republican bill like that?
The reasons are many and overlapping. First, even if the airlines wanted to do something about it, they can't because they are legally unable until Congress gets a spine and undoes the dumb labor restrictions. Don't hold your breath on that one. Also, the major airlines are cartelized with the major individuals being insulated from any harm that mismanagement brings. The CEO of American will not go broke so he doesn't really much care. He is kept comfy and cozy regardless so why should he go to Washington and waste his time undoing this madness?
My favorite quote; "Continental Airlines chief Gordon Bethune noted in testimony this summer that in a year when the industry will lose $3 billion, it will hand the federal government $14 billion in taxes. This is nuts." But the nut of it is, the people running the airlines continue to feed the monster by aquiescing to outrageous union and government demands. Why don't the carriers get together and agree to a group of standards of safety practice and fair employment practices that they will all adhere to, and when the next strike or TSA comes along, simply say to the feds and the unions "OK guys, here is the only way out - either you agree to us running the airline our way, or we go Chapter 7 and liquidate". The airline CEO with the stones to do that will win the day. But airline CEOs are a bunch of hyperconservative losers that are cozy with their captors, the unions and the Feds, and they will never do what needs to be done.
