ROBBER BARONS IN THE COCKPIT: THE AIRLINE INDUSTRY IN TURBULENT SKIES

During 1989, three of the four largest airlines in the United States became targets for leveraged buy outs (LBOs): Northwest, United and American. One (Northwest) has been successfully concluded. Two reasons account for the sudden interest in airline acquisitions: 1) The industry has become an oligopoly with ticket prices ascending into heaven; and 2) The glamor of the industry attracts men with huge egos. This article introduces the reader to several of the major actors in the Monopoly game, their enormous egos and their ruthless game plan, which invariably means more airline indebtedness. Also examined in this article is the significant foreign equity in U.S. airlines. Not only does debt pose significant problems for the long-term viability of airlines, foreign ownership adds national security concern. This article examines the motivations behind airline LBOs and the policy reasons why they are not in the public interest. It begins with a look at deregulation.

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Filing Info

  • Accession Number: 00496753
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 31 1990 12:00AM