Originally Posted by
Rightseat Ballast
I like the author's description of how "convincing" Bedford is. How can you dispute his reasoning and thought processes with claims like "we are the only regional operator of E-jets in the U.S." Did he ever hear of Compass?
That little bit aside, it was nice to finally hear some rationale behind the acquisitions. I was unaware of the new 50/50 business/leisure standard for revenue sources.
I still wonder what all of the factors were that made the cost structure of Midwest so debilitating. We all know about the changes in pilot and F/A cost structure, but we all know that our wages are not make or break points. What else was going on in the finances of Midwest? What changes have been made that will honestly contribute to Midwest profitability?
Since Midwest was taken private by TPG we can't know for certain about the costs. However, since this is a webboard, since when did not having the facts prevent anyone from posting speculation? So here goes.
TPG is a private Equity firm. In the eighties they were called leveraged buyout companies. They got a bad name from their practices, so they just reinvented themselves with a new name and packaging. They are the same parasites on society now as they were then. What an LBO firm does is take a little money and buys a company with mostly borrowed money. The company purchased then has to service the newly incurred debt, not to mention the fees paid to the hedge fund and its managers. If it works out, they manage to limp it along for a while and resell it, either with an IPO or to a competitor or even a new hedge fund. Almost without exception a purchased company ends up weaker, mostly due to lack of R&D and long term investing. Most profits go to servicing a new debt load plus parasite fees. ( for a similar story , remember Checki and company who bought out NorthWest? A cash rich company turned overnight into a weakened, debt ridden airline)
Did this happen to Midwest? Don't know, but it fits. We had , if memory serves, over 180 million in cash at the purchase. By summer we were in a cash crisis? You bet fuel was high, but it was for everyone else as well.
Combine these things with the bizarre decisions of Seabury to eliminate the MD-80,s and replace 99 seat aircraft with 76 seaters that often couldn't fly full with all the bags.
It is true that employee costs were higher at Midwest. I do think if there had been more trust that could have been addressed, but Seabury and other past behaviours had pretty much squandered any trust.
What we have witnessed is a continuation of the massive redistribution of wealth from the whole of society to the top 1%. This has been going on for about 30 years or so. A generation ago it would have been labeled (and rightly so) graft and corruption. This corruption today, however, has become legalized.
And so it goes.