Out of control
Reading the details of Japan Airlines' $25bn (gross debt) bankruptcy is illuminating. The company's problems stem from its piling into resorts, golf courses and shopping centres in the 80s before the property market crash. Although it's been making losses for 18 years, it was still giving top executives $1m retirement bonuses. Maybe all that blue sky addled their brains? Then there's the scandal of the Spanish air controllers who force the government into crazy pay deals by going on strike. According to the BBC, some of these chaps are earning £800,000 by tripling their pay from overtime work. Makes you wonder if they're sufficiently alert to guide the planes properly.
posted by Whispering Walls at 10:42 am
5 Comments:
Bankruptcy is sadly the outcome for airlines when their wage rates are set at 2 or 3 times the level of the competitions. WW can you think of any other candidates in the sector who might follow JAL?
Greed, WW.
Hi Angus - I'm not an expert on the sector. I see that Morgan Stanley has Air France as one of its top picks this year. I also hear that Air Berlin was in financial difficulties last year but was bailed out by a German travel company. As you know, the sector has been hurt by spiralling fuel prices, the recession hitting tourism and the hassles created by terrorism. I'll let you know if anything else comes to light.
C'est ca ED
I wonder if Richard Branson could conquier Japan.
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