Giving Us The Business

AP (10.19.05):

"General Motors Corp. isn't considering bankruptcy protection as a way to solve its financial troubles, the automaker's chairman and CEO said Wednesday. [Rick] Wagoner spoke two days after the automaker reported a $1.6 billion third-quarter loss and announced a tentative agreement with the United Auto Workers to cut health care benefits for its U.S. hourly workers and retirees." Wagoner: GM Not Considering Bankruptcy

Bankruptcy? Not yet at least. "GM has lost more than $3 billion in the first nine months of this year because of falling U.S. market share, production cuts, high labor costs and other factors." "The bankruptcy question has been swirling around GM since its former parts supplier, Delphi Corp., filed for bankruptcy protection this month. GM could be liable for up to $12 billion in benefits for Delphi employees. The automaker has around $19 billion in cash." At Ford, on the other hand, business is positively booming. Well, relatively speaking. AP (10.19.05):

"Ford Motor Co. reported a third-quarter loss of $284 million on Thursday, dragged down by its North American division where it lost more than $1 billion." Ford Motor Co. Reports 3Q Loss of $284M

"Ford Motor Credit Co., the company's finance arm, reported a profit of $577 million, down $157 million from a year ago. The decrease was due to higher borrowing costs, the company said." Ford, like GM, is also looking to make a deal with the United Auto Workers over health care costs. "GM [has] announced a tentative agreement with the United Auto Workers that would lower the automaker's health care costs by $3 billion a year before taxes and would lower its retiree health care liabilities by $15 billion, or 25 percent." So, uhhh, won't lower health care costs for GM translate into higher health care costs for the workers? How about the airlines? AP (10.19.05):

"Delta Air Lines Inc., which is operating under bankruptcy protection, expects to post a loss of $2.16 billion excluding special items for 2005 because of soaring fuel prices, its chief financial officer told a group of the company's pilots Wednesday. The airline is trying to get its pilots to agree to another $325 million in concessions. That would be on top of $1 billion in annual concessions the pilots accepted last year." Delta Expects to Post Big Loss for 2005

"If the two sides can't agree on the new round of cuts, Delta has said it is willing to try to use the bankruptcy court to impose the cuts." "Delta has already posted nearly $10 billion in losses since January 2001." Southwest, on the other hand, is actually making money. AP (10.20.05):

"Southwest Airlines Co. on Thursday reported its third-quarter profit almost doubled as the low-cost carrier relied on fuel hedging to offset the rising price of oil that has hurt the industry." Southwest 3Q Profit Rises to $227 Million

Go figure. Southwest is a union shop. How do they make money? Different business model. You can actually buy a book which "reveals how any organization willing to invest the time and effort can learn from Southwest's management style by creating shared goals, shared knowledge, and mutual respect among management, employees, and suppliers. This is the secret of how Southwest consistently outperforms its competitors in the high-pressure, timesensitive airline industry." Like Southwest, American Airlines is making a concerted effort to not treat its workers like shit. "The strategy goes against what Delta Air Lines and Northwest Airlines — both of which filed for Chapter 11 bankruptcy protection — are doing: Seeking wage reductions and also possibly convincing judges to let them stop funding pension plans." Well how is it working? Let's compare some current stock prices for domestic airlines, shall we? Interesting, eh?