Friday, September 12, 2008

Midwest Airline Pilots Mad As Hell, Not Going To Take It Anymore

Forensic Accountant Tracy Coenan has a brief tirade about the futility of the rally held by the union for Midwest Airlines' pilots.

In addition to all of this, Midwest wants the pilots to take wage cuts of between 45% and 65%. I don’t blame the pilots and their union for fighting this wage cut and the layoffs, but what’s the alternative? If Midwest can’t create a financial situation in which they at least break even, they go out of business. I realize that pilots are being expected to go from salaries in the $100,000 range, down to $30,000 to $40,000. Who wants to do that? No one. But what’s the alternative from the standpoint of the company?
So what is going to be achieved by rallying and making negative comments about the company? Nothing, as I see it. I still respect the pilots’ rights to do it. I just don’t think that it’s going to accomplish anything. The business model of U.S. airlines is no longer viable.

Let me just say right off the bat that I have little respect for airlines. In my opinion, the only stock position you should have in an airline is short. And we've all heard the old saw about how the best way to become a millionaire is to become a billionaire and open an airline. Ba-DUM-bum!

Let's face it, you'd have to look long and hard to find an industry that whines more, delivers poorer shareholder value, and suckles on government-doled corporate welfare harder than the airlines. As I've said before, if tomorrow some genius invented a Star-Trek styled teleport device for moving people and cargo instantaneously and cheaply through space, the very next day, airline lobbyists would be hitting up the government for big fat subsidies and tax breaks "in order to remain competitive."

With that out of the way, I would say to Ms. Coenan that having the pilots express their displeasure is reason enough in itself. Negativity and criticism, like short selling, is a critical tool in giving feedback to public companies. Getting airline management to deliver value to shareholders is akin to pushing a rope, but why should they collect paychecks for achieving nothing without being publicly excoriated for their errors?

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