View From a Height
Commentary from the Mile High City
Wednesday, December 18, 2002
United Airlines has got to be one of the most mismanaged companies on the face of the planet. If it weren't for the damage that DIA would sustain by losing it as a tenant, I would say good riddance. It looks more and more every day as though Boeing made the right decision by co-locating near Chicago and American rather than here.

The bankruptcy committee is going to include representatives from the unions, who are largely responsible for this mess in the first place. Of course, management didn't have to put them on the board to begin with. But once there, they proved the Great Socialist Flaw by voting themselves generous packages, not only sucking off United's cash, but also seriously distorting the pay scale for the entire industry. I can understand creditors being on the committee, but the unions? And now, United is going back to the unions, specifically the machinists, who almost dragged the whole company to its own hari-kiri party a few weeks ago, and asking for more concessions.

And remember, this is an airline which has consistently been accused of predatory pricing on routes to and from its hubs, something I've seen in action. Greedy, lazy management. Greedy unions. If the whole ship sinks without a trace, I won't feel sorry for one of them. Aside from my good friend Robert Allen, who really did try harder.

The whole thing also raises serious questions about the entire principle of operating under Chapter 11. I have had occasion over the last year or so to rent cars a few times. Almost invariably, Alamo wins on price. Alamo is operating under Chapter 11, which means that it doesn't have the same interest payments as its competitors. I know that the bankruptcy judge ends up approving pretty much everything the company does, which seems a heavy regulatory burden. But this really seems to be a competitive advantage wrung from the fruits of poor management. Companies which are better-run, and maybe working hard to get by in a tough economy, suffer.

If Delta, which has always treated me well, and American have to compete against United that has creditor protection, they may never be able to match fares. So the bad guys may make it, at the expense of the good guys.

Go Frontier!

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