northwest airlines

northwest airlines
Originally uploaded by recyclingfan.

As a union member, I sympthesize with the mechanics at Northwest Airlines. They helped build this company, and its only fair they share the wealth with stockholders. But, after deregulation, and 911, airlines are struggling with union contracts made in more affluent times, and high debt to equity ratios (what they owe is very close to what they are worth - totally leveraged, which might be good if its a bull market and the debt is invested to expand business, but now the debt only covers operating losses). And their planes are old: gas guzzlers compared to newer, smaller jets and prop jets. And the price of fuel is eliminating any savings made by airlines through past adjustments. So the mechanics strike rather than accept cuts in pay (up to 25%) and layoffs (up to half). Northwest will probably file bankruptcy. The airlines are dinosaurs, ready for extinction. It won't take an asteroid, just higher fuel costs. All the major airlines will fail. In response, smaller airlines with newer more efficient planes and non union employees will take over. So the mechanics of Northwest Air have guts: give management the finger instead of accepting more cuts. At least they loose their jobs with some dignity. They would probably loose their jobs anyhow. The airlines management are to blame: profits ahead of investment. The take overs of the 1980's eliminated the airlines little debt - the well run airlines, were undervalued, bought, their valued assets sold. After the corporate raids, the airlines had heavy debt, old inventory, and contracts that did not reflect realistic market conditions. So this is the result - hey, who says the public sector is inefficient? Look how inefficient private investors have made our airline industry! Good luck Northwest mechanics: better to die on your feet than live on your knees!