ToiletDuck

I was curious about what a LLC really is and how it applies to an airline. I was reading this and was wondering if I could get some clarification. Are stockholders the "members"? They don't actually get a share of the net gain or loss each year do they? I'm confused how a LLC can be on the stock market. Perhaps someone with experience dealing with this could answer?

rickair7777

I think you're confusing LLC and LCC. They are not related...

An LLC is a Limited Liaibility Company, which allows an individual or small group to do small business activities as a corporate entity without all the paperwork of a real corporation. It also seperates your personal assets from your business assets for liaibility purposes. I use one of these for real estate stuff that I do. I'm certain that an LLC could not be listed on any stock exchange, you would need to form a regular corporation for that.

A LCC is a Low Cost Carrier, or discount airline. SWA was the original model for this, and AWA was a somewhat watered-down version of a LCC. LCC's tend to use fewer hub-and-spoke operations and more direct flights, but this model does not allow them to serve every destination, especially smaller cities. Traditional hub-and-spoke works better for that. Today, all of the majors have adopted lower cost structures (or had them jammed up their butts) and are trying to operate with some characterists of LCCs.

ToiletDuck

Well Furloughman was mentioning JetBlue and Southwest as being LLC here.
http://www.airlinepilotforums.com/showthread.php?t=7674

Was it a typo or are they indeed LLC's?

rickair7777

Typo.

An LLC is limited to a small number of indivuals, usally a few Doctors, dentists, lawyers, plumbers running a practice or in my case one guy doing real estate.

There is no way a large company such as an airline could be an LLC, they would have to be a real Corporation, which is a specific legal entity. An LLC is like a "Diet Corporation"

ToiletDuck

ahhh thanks! i was reading all over and was just couldn't piece it together.

C17turtle

Rickair7777,

I'm not so sure that is true...I know when AA was purchasing TWA, it was known as "TWA LLC". Check out this article on it as a reference:

http://www.findarticles.com/p/articl...05/ai_n7827113

rickair7777

I stand corrected...not sure why a large company would want to be an LLC instead of a regular corporation but they must have had a reason.

But there is still no relationship between being an LLC and a LCC, other than the letters L and C.

mccube5

Without knowing specifics I know it has to do with the tax benefits and liability issues. My buddy is an accountant and his partnership is an LLC. Basically what you said rickair it allows them to run the business almost like a corporation without having to file as much paperwork.

Jetjok

As well, if the business goes under, in a LLC, the shareholders are not liable for the debt, beyond their investment in the LLC. That's if memory serves me correctly. Maybe by the time American bought TWA, there were very few assets, except the routes and the staff, and that's why their board of directors had them made into a LLC. However, that just doesn't sound kosher.