Another One Bites The Dust...MALEV

[speedbird591]

A government first responsibility is to its own citezens

Taxpayers are citizens too! Suppose BA was still nationalised and was still taking billions in support from taxpayers with no requirement to make a profit. Any private airline would have to compete on unequal terms as it would have to pay taxes and also make a profit. That is the opposite of competition and what modern airlines are up against with the dinosaurs like Malev! I don't want to pay increased taxes to support industries that are uncompetitive. At the moment in the UK we're still stuck with the NHS and most of the Railway and that's costing us an arm and a leg! I can't afford any more!

A Capitalist government has a responsibility to privatise all industries and make them manage themselves commercially or fail. It's not a government's job to run industries. Unless it's a Marxist government and they haven't got a very good success rate.

So which industries do you guys feel should be state supported? It's difficult to imagine the NHS not being state owned but it's screaming out for commercial efficiencies in order to save our money. The railway is a basket case but at the moment 50% of the ticket price is paid by the taxpayer and it's still exorbitant. If passengers had to pay the running costs they couldn't afford to go to work!

Ian

[TSR2]

I forgot, its only acceptable for governments and whatever the EU is to spend our money proping up banks.

[Chris Trott]

TBH, I think most of this is fallout from the WTO finally holding the EU's feet to the fire over Airbus. The EU saw the writing on the wall and is starting to finally enforce their rules. The problem is that you still have Air France and Lufthansa that still receive support from their governments (although they are required to make a profit at the end of the year). Only when they take France and Germany to task as well will the EU be able to claim that it's not political.

[speedbird591]

Absolutely right, Chris. The EU rules are politically and commercially correct but they've only been enforced selectively until recently which is why we are now seeing state subsidised companies being allowed to fail. Sarkozy tried to prop up SeaFrance recently with government money in order to increase his election chances but too many other EU countries threatened him with legal action and he had to back down. That would have given them an unfair advantage against other ferry operators who don't have a taxpayer safety net. But don't forget that the EU doesn't have a bankruptcy protection law like the US. There is no option for a bankrupt airline to continue flying without paying its bills as in the US. That's unfair competition as well.

As for the banks, Ben, I agree that they should operate under the same rules and that's why Lehman Bros was allowed to go under. But the consequences were worse than anybody imagined and if any more big banks were allowed to go under there was a possibility that the whole of the western banking system would collapse. If the government hadn't reluctantly supported big banks with taxpayers' money we would have faced total economic collapse. So however much they would wish to support the principle of capitalism they were forced to go against their principles to save the country from disaster. The mess it has left us with is nothing compared to the alternative.

Ian

[Chris Trott]

One thing about US Bankruptcy code - it's not the unfair advantage you think it is. The airlines do still have to pay their operating expenses in order to keep flying, all Chapter 11 Bankruptcy allows a US company to do is attempt to reorganize their unsecured debt. They still have to pay salaries, fuel, rent, any secured debt, and all their other day-to-day expenses. However it also means they can't get new loans, they can't issue stock, and they can't use credit. The airlines that have successfully gone through Chapter 11 Bankruptcy in the US had massive amounts of cash (talking up to and over $1 Billion US) on hand and they operate off that during the reorganization proceedings. However, if they are unable to secure the needed restructuring, they will then move into Chapter 7 - Liquidation, and cease operations until the dying carcass is either bought by another airline/owner and returned to operation with new money after having satisfied the debt requirements, or the assets will be sold off by the courts and the proceeds divvied up among the debt holders.

BTW, any successful Capitalist economy need bankruptcy laws and protections on the books to allow this kind of thing. It gives companies (and people) a chance to admit they've over-extended themselves and negotiate a settlement that will get everyone paid over time and potentially keep a company from failing. This works better in the long run than any government "bail out" package would. Capitalism requires risk. Sometimes you make the wrong move. Through bankruptcy, you can make those whom suffered because of your wrong move (i.e. those who gave you money) whole and get a chance to rebuild from zero. You'll still have a hard time to get going again (you won't be able to get credit for quite a while afterwards), but at the same time you're not totally ruined and everyone out in the cold like what happens with companies in the EU.

[Vancouver]

As an ex-pat sitting safely 5000 miles away, it is amusing, nay baffling to watch events in Europe developing at the moment. Commentators over here can see how things are unfolding yet the politicians seem blind. Cannot see the wood for the trees seemingly. And this Greek/Spain/Portugal thing, how long can it go on. Every other day for the last year it seems that we are getting reports that this is the week that will see the collapse of the Euro, yet it never happens. Perhaps next week then eh?
I love your Nigel Farage the Eu UKIP member on You Tube, he really does have his finger on the pulse, alas a voice in the wilderness and probably not the visionary he depicts himself as, but a self agrandising politico just like the rest of them. He is good entertainment though!

[TSR2]

The way I see it, it’s like a club that, in order for it to work, everyone has to be a member of. As the Americas and East aren't members of it and won’t be, it will never work anyway, as those outside the club can do what they like. So basically if you’re in the club, you have to play by the rules unless you belong to the inner circle of two (Gerance) where the rules can be applied only if they are to the advantage of the inner circle. It’s like communism; "we are all equal... (but some are more equal than others)"

In the airline industry, from my untrained eye it will allow those of any size within the club (Air France / KLM / Lufthansa) to do whatever the hell they like and continue to get back door funding. If you're small beer, A'la Malev / Spanair / Alitalia, they will crucify you. In the meantime, the airlines of the far East which are subsidised to the hilt can compete without fear of any retribution.

So, lets say there was no EU and airlines could be subsidised as much or as little as their elected governments choose; if they were not playing ball, other countries would make it prohibitively expensive for them to do business in their countries. So they'd have to climb down and play the game if they wanted to compete in those countries. It’s really easy, it self regulates because it has to. It doesn't need so overpaid pen pushers in Brussels to dictate policy.

Just think, how come we (in the west) have so much trade (in one direction) with China? I don't remember them being in any club and yet all of our governments are more than happy for us to trade with them. OK, so china is an extreme example, and I'm not an airline industry guru, but I don't see what the EU gives us that we didn't have before... other than less control of our own destiny.


Anyway, I'll agree to differ with Ian on the politics, but I'm sure we all agree its a shame to see 60+ years of history gone.

[speedbird591]

Anyway, I'll agree to differ with Ian on the politics, but I'm sure we all agree its a shame to see 60+ years of history gone.

Don't worry, Ben. There's 60+ years of history sitting right here! And I'm not planning on going anywhere for a while

Thanks for a lively and thought-provoking debate!

Ian

[TSR2]

Anyway, I'll agree to differ with Ian on the politics, but I'm sure we all agree its a shame to see 60+ years of history gone.

Don't worry, Ben. There's 60+ years of history sitting right here! And I'm not planning on going anywhere for a while

Thanks for a lively and thought-provoking debate!

Ian

I love a sparing partner that keeps me honest mate

[Garry Russell]

Something to cheer Ben up

Four ex MALEV Boeing 737-600 for part out and scrap, until now only one -600 had been scrapped.