Lear70
JAFFO
- Joined
- Oct 17, 2003
- Posts
- 7,487
This tells me you are firmly seated in MIDDLE management (and not on the financial end of the building), simply because you have no understanding of the market forces behind simply "shutting down compass".However, I would like to point out that when they finally do file the petition, NWA will have the choice of either liquidating mesaba or giving the mesaba pilots mainline seniority. Both scenarios are extremely unlikely, instead NWA will comply with the contract and compass will disappear.
First, Northwest negotiated a sweetheart deal while in Bankruptcy for all those large RJ's going to Compass. Northwest needs that RJ as a DC-9 replacement moving forward to gain a cost advantage over the other legacy carriers. Those leases have a hefty penalty to just "cancel" them.
Northwest is prohibited from sub-leasing them to another red-tail carrier because of Scope, so they'd have to sub-lease to another airline, and what executive in their right mind would help their competition get earlier delivery of needed operational assets?
Second, they're not going to liquidate Mesaba... too much money to lose. They MIGHT spin it off sooner rather than later, especially if they can get them firmly into the jet age with PCL's 50-seaters (most or all of them) over the next 2 or 3 years, but liquidate? No.
Lastly, seniority integration is the only COST-EFFECTIVE way for Northwest to deal with it. The longer the MEC waits, the better the financials protect the shut-down of compass and the more money NWA stands to lose from a loss of an IPO of Mesaba down the road.
Pop quiz, hotshot: How much money did NWA make with PCL's spinoff? Now adjust for inflation. Now tell me NWA is going to pass that money up or try to sell the goods before they're fully ripe for the picking.
When given a choice between liquidating Mesaba (a wholly-owned), giving them mainline seniority, or liquidating Compass (and defaulting on millions in leases OR selling those lucrative leases to their competition), giving them mainline seniority is the only choice that doesn't cost millions (especially if they integrate seniority now before they hire off the street, make the deal that they start at year 1 NWA rates (they'll still go for it to get that mainline seniority number), and replace the high-seniority MSA list with lower-time guys, thus making the MSA balance sheet look even better for an IPO with lower labor costs).
Do the math. I thought that's what you management guys were "supposed" to be good at?
No wonder these airlines keep going bankrupt. My grandmother makes better money decisions that most of you clowns...
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