Stupid Quote of the Day

Bankruptcy bad for business? Not in 2005


Metropolitan Airports Commissioner Tammy McGee in today's Star Tribune on the MAC's certainty it can weather a Northwest Airlines bankruptcy:

"Demand for flying is somewhat independent of a bankruptcy of any carrier," she said.

Strictly speaking, McGee meant that the fees airline passengers pay for the privilege of using the airport won't dry up with bankruptcy; the "passenger facility charges" are rolled into the price of each ticket. The collection of these fees does go up and down with the number of users, not the fiscal health of the airline. It's counterintuitive, but strictly speaking, true. This little paradox does, however, beg any number of interesting questions.

For starters, if business is good--that is, if demand is high--how come the airline is bankrupt? The cost of oil is the short answer, but the untenable creature that is the current hub-and-spoke-and-fortress-hub system is the larger, and probably more important, answer. Of course, capitalists don't want to go there--that's anathema, burdensome regulation. (This manic belief in the free market didn't stop Northwest for asking last week for an exemption from anti-trust laws so that its partnership with Delta wouldn't create what would have to be viewed as a monopoly, but let's not digress too far here.)

And then, if the advantage of bankruptcy is to allow such a major employer to do better by its shareholders by ditching its pensions and unions and domestic workforce and becoming a crappy employer, don't we have a bigger problem than where Northwest's stock symbol is on the ticker today? In this case, bankruptcy is tantamount to a bailout, but it doesn't sound like a bailout that's at all in the public's interest.

And finally, has Ms. McGee forgotten that on 9/11 Northwest was already in arrears on its payments to the MAC, and that in the days following the World Trade Center bombing the airline said that as a result it couldn't make its back payments? (Which it eventually did, we should note.) If that financial hardship interrupted the airline's payment of its regular bills, why wouldn't bankruptcy, a legal proceeding that's designed to do just that? What is the MAC going to do if Northwest stops paying that bill, evict its largest tenant from more than 80 percent of its gates and get chummy with Sun Country? C'mon.

The MAC has a long history of bowing to Northwest and the governor, often in that order. And given that Tim Pawlenty has a history of suggesting that what Northwest wants, Northwest should get, it sounds like the subtext of the MAC's remarks is that when it comes to choosing between stock prices and Minnesota workers and travelers, it's not going to get in the airline's way.

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