Monday, March 23, 2020, 10:16 pm Economy | Companies
Airlines with problems
Airlines with problems
Photo: Wikipedia
All airlines, including the field giants, are on the verge of bankruptcy, with at most 20% of the aircraft still in operation and the other park on the ground. Those in the US have already said they will need $ 50 billion in state aid (which will definitely be higher) and so will everyone else. But Tim Wu, a law professor at Columbia University in New York, says he argues that before we can provide assistance, we need to ask everyone to change their attitude toward clients and employees.

For American Airlines, the largest airline in the country, the period between the mid- to late-1990s was what the Bible calls “years of indulgence.” In 2014, by reducing competition through acquisitions and mergers and collecting billions of dollars through new baggage fees, Americans began rising to astounding levels of financial success. In 2015, it reported a profit of $ 7.6 billion – compared, for example, to $ 500 million in 2007 and $ 250 million in 2006. It continued to make profits by the end of the decade. “I don’t think we’ll ever lose money again,” said Doug Parker, the company’s chief executive in 2017.

There are a lot of things that Americans could have done with that money. He could have made reservations for future crises, known as the regular cycles of peaks and abysses that the airlines go through. He could have settled the disputes regarding contracts with pilots, flight attendants, and mechanics. He could have invested heavily in improving services, trying to repair the long-standing reputation of the most deficient large company.

Instead, Americans threw most of their money into buy-back programs. From 2014 to 2020, in an attempt to increase its revenue/share, American has spent more than $ 15 billion buying back its own shares. Despite the risks of proverbial black days, he managed to subside his liquidity reserves. While throwing money at repurchases, Americans began to borrow heavily to buy new aircraft and modify old ones to fit more seats. Since 2017, analysts have warned about the risk of bankruptcy in the event of a deterioration of the economy, but American has continued to lend. It now has an accumulated debt of $ 30 billion, almost five times the market value of the company.

In no time during the years of American wealth has it improved the way it treats its customers. Ticket fees increased to $ 200 on domestic flights and $ 750 on international flights. Highly despised baggage fees have increased to $ 30 for the first and $ 40 for the second. These taxes have generated billions, but they have not helped the company improve its timely landings, runway delays and over-bookings. Instead, the “innovations” from American consisted of the elimination of aircraft screens, the reduction of the size of toilets and seats, the introduction of a “basic economy” class that initially included the prohibition of any cabin baggage.

qatar airways

Following the outbreak of the coronavirus epidemic, which is causing chaos in the airline industry, American Airlines has not yet requested state aid – at least not in many words. But after a recent meeting with the management of the company, Larry Kudlow, director of the National Economic Council, said that “certain sectors of the economy, the airlines coming to mind,” might need assistance. Treasury Secretary Steven Mnuchin said last week that “at the top of the list” for federal rescue loans will be airlines, including American Airlines. ( The New York Times )

N. Red .:
an angry reader informed us that to get home faster (March 18 instead of 23) from New York, British Airways charged March 14 with 385 euros in full crisis – after Donald Trump announced the blockade of flights from/to the Schengen area and just three hours before announcing similar bans with the UK and Ireland. On the New York – London race on March 18, the occupancy rate was below 25%, so our reader paid a hefty sum (over 50% of the initial round-trip ticket price) to fly on a virtually empty plane. ..