Saturday, January 27, 2007

Morality and Bankrupcy in Airlines


American is the only one of the six "legacy" carriers (the others are United, Delta, Northwest, Continental and US Airways) that has never been in bankruptcy. Is it irresponsible for American not to use bankruptcy to lighten legacy costs — shredding labor contracts and reducing obligations to retired employees?

Gerard Arpey, American's chief executive, replies with a laconic "no." He considers it unseemly and shortsighted — and unnecessary — to seize short-term competitive advantages by reneging on labor contracts freely consented to, and to escape commitments to investors who lent you money in good faith. Furthermore, the damage to employee relations makes bankruptcy more costly than some companies realize when they use it as a routine management tool.

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?