Sunday, February 20, 2005

Now That's a Twist

The news that US Airways has received a major financing offer is not too surprising. After all, commercial aviation has a creation glamour factor. How else to explain this and this. What is surprising is who one of the major players is. AWAC's entire existence for quite some time has been to blend with United as United Express. Could recent developments between the two be the cause between a rather bold move for AWAC? Since AWAC has long been looked at as United light, it would make sense that a major casualty of United's chapter 11 adventures is a downturn in the relationship between the two. By positioning itself as a power behind a revitalized US Airways, AWAC may have found a way to survive and thrive without UA. Of course, this is contingent on whether or not US Air can come out of bankruptcy competitively. Still, the move by AWAC is a bold one for a traditionally conservative company in a conservative portion of the commercial market. It would be a twist indeed if AWAC left the UA fold and became a major player at UA's main North American Star Alliance partner.

Continuing the theme, United has announced a plan to leave bankruptcy (again) by next fall. I know that as the second largest carrier in the United States and with the billions of dollars at stake, many do not want the airline to fail. The number of people that will be affected, not to mention the airlines close relationship with Washington DC (Washington-Dulles is a main hub) means that keeping the airline afloat is politically desirable, but when is enough enough? Of course based on sheer numbers alone, a standard one year chapter 11 is next to impossible. This isn't the neighborhood bakery. Each aircraft alone is worth enough to keep most small businesses afloat for years and the number of employees in a single outstation (not a hub, just an outstation) is enough to staff a medium size restaurant. However, at some point the end most come. The industry is bloated and allowing an airline to compete unfairly for three years is unhealthy and unfair. Eventually the money that is being spent while US is in chap. 11 will have to come off someone's books. As a Denver native, I want UA to succeed, (I remember when we were a three hub town) but while Delta flirts with chap. 11 and other airlines struggle along, UA has the power of the gavel to enforce change. If the airline cannot pull out of its financial tailspin this Autumn as the current plan now specifies, the plug should be pulled.


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