Apr 15 2008
Is there any other business you can get away with losing money?
[KUTV]
Delta Air Lines has reached an agreement with Northwest Airlines to take over Northwest and create the world’s biggest carrier. The boards of both companies gave the deal the go-ahead Monday. Delta said the combined airline will have an enterprise value of $17.7 billion. It will be based in Atlanta, and Delta CEO Richard Anderson will head the combined company.
The announcement comes a year after the two carriers emerged from Chapter 11 bankruptcy protection. Both carriers are losing money again but are in much better shape than the four much-smaller airlines that have filed for bankruptcy or gone out of business in recent weeks. (emphasis mine)
Read about it here.
[From me]
Does that last line bother anyone else? 1st both of these airlines lost money. If I can’t pay my bills no one is going to bail me out. 2nd their losing money now but, “they are in much better shape than….” Is that how bad it has become in this nation? Are we settling for that kind of mediocrity? If a church couldn’t pay its bills no one would be bailing them out. Something is very wrong here.
What do you think?
24 responses so far
Well, I’m not sure of the circumstances of these airlines but here’s how I’ve see it work for some ventures:
Say you are a bank or some other financial institution and a company that owes you a lot of money is nearing bankruptcy. If you can do something to keep them afloat long enough to get them back on their feet they’ll be able to afford to pay you back and you’ll continue to have a business relationship with them. If you force them into bankruptcy you may both end up loosing. It’s a calculated gamble on the part of the bank and is nothing unusual. No conspiracy and no indication that your nation is falling apart (although falling apart it probably is).
Another example of an airline being bailed out is when it is the sole national carrier for a nation dependent on tourism and the government sees value in keeping the airline going to the greater benefit of the economy of the country (as recently happened with Air New Zealand).
What amuses me though is how you drew a parallel with a church toward the end. Airlines and church?? Church??! I struggled to see the relationship and then I remembered I’ve heard it said that America is a prime example of what happens when religion is turned into a free market enterprise. It’s interesting to see even someone like yourself acknowledge that churches are businesses who, like everything else, are dependent on a flow of money.
Damian,
I could have said any non-profit or business. It has been about 16 years since I was in the business world so church is all I really know.
Kevin Bussey’s last blog post..Is there any other business you can get away with losing money?
Ah, I see.
But do you see how it might be beneficial to keep a company that owes a lot of money to you afloat if it means that they’ll be able to pay you back?
yes I see that. But don’t you find it ironic that the article points out they are losing the “least” amount of money. Plus all of their execs get hefty salaries and bonuses.
Kevin Bussey’s last blog post..Is there any other business you can get away with losing money?
Without airline travel, there would be huge problems in America. Tremendously reduced productivity due to expensive executives, engineers, and other valuable people either having to clog up the freeways even more than they do now or spend less time in the places they need to spend time. For whatever reason. Many things are global. Keeping the airlines afloat, pardon the pun, really IS in the best interest of the nation. Neither you or your church enjoy such a status, but as a matter of fact, the government of the US “bails out” the church EVERY DAY by allowing it to operate tax free and with no monetary accountability. If churches had to pay local, state, and federal taxes on the money they receive, or EVEN if there wasn’t a deduction from MY taxes for the money that I donate, I daresay that virtually every church in America would be financially insolvent or truly bankrupt within three to five years. Just a guess. As a further thing, pastors are “bailed out” every year when remarkably large portions of their “salary” are counted as “housing allowances.” Why isn’t MINE a “housing allowance”? I work a secular job and probably have more bills and just as many financial problems as my pastor, yet he benefits from a tax break that I, as a layman, am not allowed to have.
So, yes, I challenge you, the US government DOES bail you AND your church out on a regular basis - every time that church RECEIVES money and every time that church PAYS you money. There is worth to what you do, and to what your church does, and our government recognizes that, much in the same fashion that the public service value of the airlines is recognized. Bankruptcy laws are actually for the protection of the LENDER, not for the “escapism” of the borrower. We as Christians sometimes claim that it’s “sinful” to declare bankruptcy, but there are times when doing so actually benefits our creditors more than if we just keep fighting and never pay. The most common forms of bankruptcy actually result in the creditors getting paid - even though they sometimes forfeit the right to charge interest or as much interest - more than they would if the debtor just threw up his hands ( or those of his corporation) and became a non-entity.
Just perspective.
In Christ, bro.
Bernard,
I may get a housing allowance but I also pay double Social Security. So my payment to the government evens out I promise you.
Kevin Bussey’s last blog post..Is there any other business you can get away with losing money?
Kevin - Only on the basis of being self-employed, right? So does every self-employed individual that DOESN’T get the housing allowance break.
Please don’t misunderstand me, bro. I’m GLAD ministers get the breaks they do. I praise God that we live in a country that works that way. But please, let’s be clear, it IS a break. Otherwise your full income would be taxable - including the housing allowance, and you would pay even MORE Social Security.
I’m not trying to be rude, forgive me. You just asked if “that last line” bothered anybody else, and my intent is just to respond with “No, and here’s why.” Sorry if I’m coming across like a jerk.
How this got to be a discussion about ministers pay is beyond me. Also, I do take offense to implying we are getting rich. I’m raising half my salary right now & took a paycut. But I’m where God wants me.
The self-employed part about ministers is hypocrisy. We really aren’t self-employed because we can be fired at anytime. At a previous church they congregation voted to cut the entire staff’s salary. I get really offended when people make it sound like we have it made. I made a whole lot more money selling wire. I’m not in the ministry for money, I’m in it because I was called by God.
Kevin, one of the items applied against income, as an expense, is depreciation. So that can contribute a lot to the “loss” but the still wind up the year with more cash than they started with.
I don’t know the numbers for the airline business but I was a Business Broker for some years, and saw that all the time.
Bob Cleveland’s last blog post..God Takes No Pleasure ….
Ummmm, it might have been to do with the fact that you compared churches and then responded to Bernard’s comments on church tax breaks by talking about your own financial situation.
And here is a fine example of a strawman argument where you make out that someone here has been saying that you are getting rich whereas all that’s been said is that the church gets tax breaks.
Quit playing the victim for the sake of controversy.
i’ll respond to the airline issues without any parallel to churches.
yes-the airlines are vital to the US economy. But while there are advantages to bailing them out, there are also HUGE disadvantages to bailing them out. And many are realizing the disadvantages may be outweighing the advantages.
What we need is a new system where we put limits on airline assistance which would convey to the managers of the airliners that they are going to have to start running their operations more like a business that is trying to satisfy customers and stakeholders.
We desparately need to start turning this thing around.
Can I think of a company that would also receive bailouts?
Yeah. Savings and Loans. For the same reasons above.
And there is a huge amount o ftalk about bailing out the mortgage companies due to the “credit crisis.” Huge mistake.
davidbmc’s last blog post..Leadership Tips from David McCullough
Oh, and some farmers get subsidies to not grow certain crops.
davidbmc’s last blog post..Leadership Tips from David McCullough
Thank you for setting me straight Damian.
Damian’s last blog post..The Distance to SN 1987A
Oh, wow. This is terrible news. In the past 5-10 years Delta has just gotten terrible. Lost luggage all over the place, poor service, late flights…all this data from personal experience.
If they get any kind of bailout, the highest executive pay ought to be tied to flight captain pay with no one making more than that. If they succeed in saving the company, they get a 20% bonus when it can be given without causing a loss.
Bob Cleveland–very good point about the depreciation writedown. Cash rich, but bookkeeping poor.
Another bad thing is that the consolidated airline will probably close flight routes. That means flights on prime routes will fill up faster and Delta will definitely overbook the flights. That’s a common practice already. Plus, fewer airlines means that when worker strike an airline the transportation industry takes a bigger hit.
Enough rambling.
The next question would be “What other business can you get away with no customer service?” Not only are they losing money, but their customer service is virtually nonexistent. They overbook flights, lose luggage, cancel flights and the customer is the one left out in the cold. What other businesses besides government agencies can get away with such poor practices?
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Kevin - Whoa, my friend, brother in Christ. Whoa. Stop. Just freaking stop. In no way do I mean to criticize you, imply that you make too much money, or express any opinion that says that you are in the wrong. You have inserted MANY words into my mouth in your comment. Many, many.
I have absolutely NO idea how much money you make. No idea. I don’t even know where you pastor. I definitely have no grounds to imply that you make too much money. You owe it to me and to yourself to read my post very carefully without the “he’s attacking me” presumption in place. I am NOT attacking you.
I only responded to your post. YOU invoked the church and YOU invoked yourself. “If I can’t pay my bills, no one is going to bail me out”, shortly followed by “If a church couldn’t pay its bills no one would be bailing them out.”
I’m not going to apologize for what I said, Kevin, because it’s true. It’s true for United States pastors of all denominations and types. As to you being offended, you were offended by things that I did not say, so I cannot apologize for them.
I’m sorry that this has taken a wrong turn. I want there to be absolutely no misunderstanding between us, as I really enjoy reading your blog and had already started to think of you as a friend, though I’ve never met you and quite possibly never will. I’m definitely not here to fight with you. I only intended to challenge you; you seemed to be feeling as though, since someone bailed Delta out, they owe you the same thing. My challenge - intended to be a loving brother to brother challenge - was simply this “Hey, you do get some breaks. Be thankful. Don’t whine about this, because you don’t sound grateful.” I apologize, with huge sincerity, if my taking that tone was offensive and inappropriate. I did not intend to be insulting or attacking, and although I’m certain that a non-biased review of my statements would reveal that I was NOT insulting or attacking, I apologize if my statements made you feel the need to be defensive.
Now, I’ve apologized and tried to be straight up in this post and in my previous post above, to which you responded in a very inappropriate manner by accusing me of things that I did NOT say or even imply, so I’ve done all I know to do. In Christ, man, I’m sorry I offended you. Very sorry.
Bernard,
I’m sorry if I accused you of anything.
I never asked for anyone to bail me out of anything. I am grateful for everything I get. I think we should all pay our fair share. I wrote a check to the government yesterday that was definitely more than I feel I should but I’m in the US and will pay what others do. I did not opt out of SS because I couldn’t in good conscience. I accepted school loans so I felt I would be a hypocrite to say I don’t believe in government help.
The only reason I even mentioned church was to say the government would never bail a church out. I don’t think they should either. The airline Presidents are getting bonuses for not “losing too much money.” That is wrong. If a pastor was losing money, i guarantee they would be gone.
Also, ministers are not really self-employed. So for us to have to pay SE tax is crazy. I’m telling you it all evens out in the end. You have no idea how many times church members remind pastors about their salaries although not where I’m at but I have been in the past. Trust me it was often.
Kevin Bussey’s last blog post..And people say our sins don’t affect others…
I think churches should be required to pay their half of the SS tax, but that creates a big problem - churches shouldn’t have to pay taxes.
It gets sticky because people like Benny Hinn and Creflo Dollar abuse it.
EVERYBODY has to pay SS tax if they have income. I understand it’s frustrating.
Sorry I derailed your post. Oh, wait, it was about planes, not trains. Ha. Funny.
One of the reasons airlines lose money is because of fuel prices and low passenger loads, but they still have to make the flights or else lose even more money.
They also lose money when the unions negotiate mechanics contracts that pay mechanics more money than they should get, or else the mechanics strike and shut them down.
Then the FAA is likely to impose new rules for inspection procedures at any time. Then there’s the insurance companies.
These presidents are given credit for pointing the ship in the right direction. Some tides can’t be turned overnight, but improvement is a good thing.
There are some businesses at which I am convinced that it is impossible to always “make money”. But without those businesses, many others would fail.
CEOs and presidents are paid a lot for one reason. No one would take the job if it only paid minimum wage. Seriously. The only way to make a person want to take charge of a multi-billion dollar company is to promise him money and power. Otherwise he would laugh you to scorn.
I wish I would just shut up, for crying out loud.
Bernard,
Don’t stop. I welcome your comments. I like it when people make me think.
Kevin Bussey’s last blog post..And people say our sins don’t affect others…
Aviation in general is incredibly expensive. Incredibly. Airplanes of the cheapest sort cost $100,000 and more. They are very small, very uncomfortable, and very intensive to maintain. Those unfamiliar with the degree of record keeping and maintenance logging that is required would be shocked, I think, at the fact that the slightest change to an aircraft must be documented thoroughly.
Pilots incur hundreds of thousands of dollars in getting to the level where they can pilot the big jets. Sometimes, they have “deals” with the carriers where they work off their debt over time, etc., but sometimes they are just in debt. Learning to fly, in many cases, comes after college and carries just as big a debt. So, the pilots are expensive.
Passenger loads fluctuate. Weather conditions ground planes and make for incredible burden on employees. All airline employees are union employees, and that is an entire industry of itself. I’ve heard that a 1 cent change in the price of gas affects the post office by like 8 million dollars - can you imagine what it does to airlines, who burn thousands of gallons on every single takeoff? http://en.wikipedia.org/wiki/USPS (eighth paragraph under History)…
Ticket prices are no longer truly regulated, but they are driven by the market. If there’s a dirtbag airline out there willing to skirt the maintenance regs and fly old airplanes, possibly even paying FAA inspectors under the table, they can sell tickets cheap. This means that Delta had better be close, or soon there will be trouble all around.
This is just from my personal exposure. I’m not a pilot, I don’t work for the airlines - I just really like airplanes
I know, pastors invest a lot in their training, too. I’m with ya. God bless you for what you do…
Bernard,
Check out http://www.flightgear.org/ if you haven’t already. It’s free, a little tough to set up, but 10x better than Microsoft FlightSim once you get it running!
At one point, (about 20 years ago), Delta Airlines was one of TWO “profitable” carriers in the sky (the other was Southwest). That was when the company was “employee-owned” and not run by the labor unions. Then the un-thinkable happened.
They unionized.
So much for profitability, great customer service, and a sterling reputation. I had flown on Delta Airlines all over the world…but not anymore. I had been as “pleased as punch” with their service…but not anymore….
They basically shot themselves….
Phil Hoover’s last blog post..President Carter…Go home…
Just to hopefully support my point a little bit…
http://www.citizen-times.com/apps/pbcs.dll/article?AID=200880422133&source=nletter-news