It is hard to tell if Roben Farzad is speaking on behalf of investors, customers or employees when suggesting that the parent of United Airlines Inc. should be liquidated. It is harder still to say which of these groups, if any, would benefit from his plan to put the troubled carrier out of its misery. Without doubt UAL Corp., United's parent, is in a tough situation. The company lost $2.7 billion in the second quarter (including $2.3 billion in charges) on high fuel costs and is engaged in an ugly public dispute with its powerful pilots union, the result of years of ill will between management and employee groups. But is liquidation the answer? Tough to think that the company's shareholders would think so. Though United does hold coveted landing rights on the Pacific Rim and a powerful hub in Chicago, it is unclear that other airlines, themselves in cash-preservation mode as they deal with the same high fuel costs that plague United, are in a position to engage in a bidding war. It seems uncertain that United would do any better than recouping its $8 billion in long-term debt (minus cash) in a liquidation, leaving little for other parties. Employees, obviously, would not benefit. But Farzad appears to be advocating for consumers with his plan. "Travelers and the beleaguered air-transport system," he writes, "would be better served by United's creative destruction: Liquidate it and let stronger hands manage the pieces." This too, ...
Anytime
It is hard to tell if Roben Farzad is speaking on behalf of investors, customers or employees when suggesting that the parent of United Airlines Inc. should be liquidated. It is harder still to say which of these groups, if any, would benefit from his plan to put the troubled carrier out of its misery. Without doubt UAL Corp., United's parent, is in a tough situation. The company lost $2.7 billion in the second quarter (including $2.3 billion in charges) on high fuel costs and is engaged in an ugly public dispute with its powerful pilots union, the result of years of ill will between management and employee groups. But is liquidation the answer? Tough to think that the company's shareholders would think so. Though United does hold coveted landing rights on the Pacific Rim and a powerful hub in Chicago, it is unclear that other airlines, themselves in cash-preservation mode as they deal with the same high fuel costs that plague United, are in a position to engage in a bidding war. It seems uncertain that United would do any better than recouping its $8 billion in long-term debt (minus cash) in a liquidation, leaving little for other parties. Employees, obviously, would not benefit. But Farzad appears to be advocating for consumers with his plan. "Travelers and the beleaguered air-transport system," he writes, "would be better served by United's creative destruction: Liquidate it and let stronger hands manage the pieces." This too, ...