Volume 67, Issue 7

The United Airlines Bankruptcy: Who’s the Real Culprit?
by Jacob Sassoon

Whoever thought that the airline industry could be influenced by politics as it is right now? This writer didn’t. In what seems to be a political move by the White House, President Bush has rejected a plea by United Airlines for taxpayer aid to keep the company out of bankruptcy court. The impending layoffs and Chapter 11 filings give the impression that the government is going to take a laissez faire attitude, and let the airline industry as a whole decide on its own winners and losers.

As a result of Bush administration’s passivity in this issue, Americans may be lead to assume that the current administration seldom intervenes when a significant corporation such as United’s parent UAL Corp. is about to join WorldCom in the group of “has beens” in bankruptcy court. This is not true; other industries with more political influence than the airline industry have typically achieved, in triumphant numbers, tariffs and loans from the government.

A simple question arises: Why in the world would the Bush administration snub the airline industry, while willingly lending a hand to others like the steel and agriculture industries? All signs point towards Election Day November 2004. Like any individual incessantly worrying about job security for the future, Bush, the most powerful human being on the planet, is taking it a smidgen further than most people anticipated. Steel makers have long been united in their pleas for aid, but most notably they have been fortunate enough to be concentrated in Pennsylvania and West Virginia, states that Bush’s political analysts say he needs to win re-election. Big Steel made an argument that was well listened to by the president and his aids. They made it apparent that steel tariffs were the price of getting their precious votes on a bill to give Bush the authority to negotiate new trade deals, which by a twist of fate passed the House by one vote.

The steel industry isn’t the only one that’s taking the political approach to Washington when in trouble. Farmers have long been taking advantage of their seemingly disproportionate representation in the House. Because of the fact that two senators represent each state, farmers have been given the money they sought after since the 1960’s. This began at the same time the New Deal was passed which is part of the Government’s Welfare to Work Strategy that assists the young unemployed populace, jobseekers and employers within business. Lobbyists that represent these industries maintain that food and steel, in the form of weapons, are essential to national security. Still, lawmakers back the industry even if most of these claims are dated. Farms produce more than the consumer can buy or consume and steel is being replaced with ceramics and depleted uranium as the material of choice for weapons.

The airline industry’s bar was set high from the start; they have had problems with overcapacity, airline leases, and costly labor contracts. Even when the Bush administration did intervene after Sept. 11, his advisors were weary about interceding too much as they considered the airline industry as a deregulation success story.

The way the law was laid down, UAL didn’t have a chance from the beginning. The law says that the $10 billion loan-guarantee would only be tapped if the company could realistically pay the loan back, a huge problem for UAL. They effectively did everything they could. People who have an interest in UAL sent their homestate congressman from Illinois to talk directly to Bush and at the same time recruited workers to lobby hard to avoid Chapter 11. After everything is said and done, the law states that the final decision goes to the board with its intricate rules and details, and, as a result, it insulates the White House from taking any direct political heat over the impending rejection.  Now you tell me who’s really to blame.¨

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