Dirty, Rotten, Beautiful Southwest

You're ruthless, Southwest (NYSE: LUV  ) .

ATA Airlines is dead and now you, like a vulture, want to pick at the carcass. This week, you bid $7.5 million for a portion of the defunct airline’s assets, including its operating certificate and 14 flight slots for New York's LaGuardia Airport. A bankruptcy court is reviewing your application now.

They won't find a plan to take over ATA's jets, or hire its former employees, or assume its gates at Ronald Reagan Washington National Airport. You want to grow as cheaply as possible -- just like your peers at UAL Corp.'s (Nasdaq: UAUA  ) United, Delta (NYSE: DAL  ) , and US Airways (NYSE: LCC  ) , among others.

But you're more ruthless than any of them. You're a grave robber.

Someone had to be; our capitalist system thrives on creative destruction. You've embraced this truism knowing that you'll very likely take criticism for doing so. Former ATA employees will call you heartless. They'll call it a tragedy. Guess what? They'll be right. But no one said that capitalism was easy. Failure is an essential element of the system.

Failure creates opportunity for survivors. Assets are absorbed, competitive advantages created -- here, seven new daily nonstops in JetBlue's (Nasdaq: JBLU  ) backyard. And it's all because, when ATA was barely breathing, regulators didn't intervene. Instead, they allowed a free market to work as intended. They allowed you to work.

Congress should be taking notes. Ford (NYSE: F  ) , General Motors (NYSE: GM  ) , and Chrysler argue that, without at least $25 billion in bailout money, one or more of them will fail. Let them. As taxpayers, we'd do better handing out $25 billion in employee bailouts -- extended jobless benefits and low-cost small-business loans for former Big Three workers. At least then we'd be pumping money directly into the economy and funding new capital-creating ideas. Isn't that better than pushing life support to sickly firms that were declared brain-dead years ago?

You're ruthless, Southwest. And that's exactly as it should be.

Taxi toward related Foolishness:

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Find his portfolio holdings here and more of his Foolish writings here. The Motley Fool's disclosure policy is ready for take-off.


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  • Report this Comment On November 21, 2008, at 5:10 PM, bigwordsmallmind wrote:

    The scary thing about this article is that it is true. But not so much about businessman or corporation devouring its prey but the glee and joy that is behind the words espousing the virtues of our capitalist system. Even in the middle of one of the worst financial collapses of our history this story is still portrayed as a hero vanquishing the defeated, even though the pen that killed him was was not his own. That pen belongs to the well read and educated elite, the ones in positions of power, Congress, Senate, Lobbyist, Businessmen, but their education was not meant for the noble cause that they sell us. It is for their personal gain, and a tool they use to divide and conquer those less empowered. Our founding fathers fought to rid themselves of a tyranny more than 200 years ago. And with the failure of free market capitalism in full view we glorify the system by bringing light to the bowels of misery and call it a rose. A loan Guarantee is not a bailout the company agrees to take on new debt to survive and then repay the loan. UAL corp asked for it and was dragged through the courts for 3 years trying to get it. and in the end the loan of 1.8 billion to a corporation was turned into a 6.6 billion debt taxpayers would have to pay back cause bankruptcy caused the PBGC to take on the retirement plans. Where was the logic of capitalism here or commen sense.

    Since 1977 and deregulation we have a plethora of examples as the lack of regulations has led to the heartache of millions of people. We have also seen the joy of millions benefiting for a few moments to go on vacation on the airplanes but they went into debt to do it a huge shell game that said don't pay the true price of anything just let credit and equity and imaginary financial instruments determine your future. Well the hammer and anvil of a reality check is upon us and those that didn't extend themselves and lived within their means are probably better off because of it. And now our politicians that caused this mess are saying we need regulations again to stop the bleeding. Let this be a lesson to all just cause we have a slogan that sounds good it doesn't mean it is. "free market reform capitalism" . So a good dose of regulations, laws, and socialism will be the only thing that saves us from anarchy, which incidentally we have already in our streets, with drugs and crime. The only thing the rich fear is not being able to spend their money and when chaos is at hand, the good hardworking employees that fight for scraps and pray they don't get ill will revolt. So lets take our medicine call it what you will but don't be surprised when it sounds like socialism. and by the way you can still be a billionaire in socialism.

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