Chapter 11, well OK, but it’s not very dignified is it?

A really thought-provoking piece in the Dallas Morning News about what would have happened if American Airlines hadn’t avoided Chapter 11. This got my attention because I previously wrote respectful things about the airline for dodging the bankruptcy bullet, and now it seems there are plenty of people who think that just shows how unsophisticated I am.The newspaper explores the idea that American’s rivals are actually better off having shed, in particular, labour costs while in bankruptcy. And it notes that the airline’s labour relations are not so great even now.

Well, as a European it’s fair to say that the abrasive nature of US labour relations is something that’s not so easy to comprehend – even here in the UK which much of mainland Europe believes is pretty much the US in microcosm. But knockabout bargaining seems to have been pretty much a way of life at American for as long as anyone can remember.

And I wonder if Delta, United et al will really benefit from their dips into bankruptcy protection (that’s protection from their legal creditors remember). It’s one thing recalibrating the wages scale every decade or so, but once the euphoria has worn off then the whole ghastly cycle begins again. And mutual respect is hardly likely to characterise the management/labour interface in future.

I don’t buy the idea that Chapter 11 is just another legitimate business process. It’s the penultimate symptom of failure and I think that any company where acceptance of its likelihood is in the culture is probably going to experience it for real.

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