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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.
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