Corporate Raiders, Greed and the American Airlines Bankruptcy

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There are some serious issues facing the citizens of the United States.  The question remains as to whether they will bother to take a clear look into the Corporate fabric and structure of most of these American companies and the philosophy behind them.  Boards of Director are selected based on two very important factors: (1)  They have some fundamental understanding of the business they attempt to Direct and (2) Their mission statement is to make the stockholders of that company as much money and value that could be possible.  The reality of course is that retired politicians (nothing more than paid lobbyists), high visibility business folks from other industries and the celebrity corps to whit: Bringing visability!  We won’t bother to mention cronyism or family relations or paid operatives directly.  Some Boards have those too!

A little background is in order.  In the old days, governments and businesses could borrow operating capital because they either had good fundamentals (paying their bills on time) and value based on growth potential.  Any bank would lend to someone with a great and growing company.   Cash on hand was an important part of the value of the company, or the standing inventory, or the cash flow.  Executives received moderate bonuses based on positive performance of the company and had to be approved by both the Chairman of the Board and a majority of the Board of Directors.  Stock Options were usually offered to very underpriced stock based upon competitors and their value.  The Stock Option enhancement was initially suggested in order to bring in some powerful executive from another company as a so-called “baby bonus”.

When all the rules changed in the late 1980’s, brought a good reason to build our manufacturing plants in other countries with low cost labor, i.e., Mexico, Korea, China, Malaysia and the Phillipines.  By this time, Japan had already inflated the salaries of its workforce and became too expensive to send our major manufacturing facilities to and spend the cash to transport those goods back to the U.S.A.  The so-called mequiladoros on the border of Mexico became an easy way for U.S. Companies to dodge labor and environmental laws, taxes on products produced and a very easy way to deinflated cost to the bottom line.  More reason to buy their stock and through the simple law of supply and demand – raise the stock price, thus a great benefit to stockholders, executives with stock options and speculators.  This strategy has been used by Big Oil and Big Pharma for years.  They called it Labor Efficientcy.  This is not Space Science!

Shipping American jobs overseas was further enhanced by various Sessions of Congress who had been lobbied to give tax breaks to companies that sent their manufacturing out of this country, as if it was a simple “Export Function”.  In the meantime, the chat on the street was that our economy had changed to a so-called “Service Industry” economy.  With that designation, the demand for Technology Engineers to change the entire system meant that HI-B Visas were being required to fill the necessary positions here in the U.S.A. by foreign workers; Indian, English, Japanese and others.  The enhancement meant that the so-called “Middle Class Management Jobs” were then going to foreigners – since our workforce supposedly didn’t have the educational values necessary to do the job.

In 1998, the amount of “Black Drug Economy” in the world was reaching critical mass.  The Russian moguls and gangs, the Chinese Triads, the Mexican Cartels, the Asian Tigers…….all had no place to get rid of cash made by the sale of Drugs, White Slavery and other illegals activities around the world.  The global banks became the willing co-conspirators.  For those who have not seen the Al Pacino classic “Scarface ” about the influx of Cuban immigrant criminals during the Carter years….everyone should.  The banks had been laundry facilities for South American Drug Cartels for years.  They for all intent and purposes just went global.  Hedge Funds, Derivatives, Credit  Default Swaps and 100 Bernie Madoff off shoots took dirty money along with the clean and leveraged it out 300 times.  Not 30 times….300 times.

Bain Capital is currently the company that is running the show for American Airlines and hotshoe to rush massive cuts to employee benefits, wages and future stability.  The term “outsourcing” is already being used for the Baggage Handlers and Ground Folks.  Bain Capital is the Mitt Romney supported company that supposedly saved lots of jobs.  Right now the talk is lay-offs of up to 20,000 loyal, hard working employees.  American Airlines sits with nearly $4 and half Billion dollars in cash.  American Airlines gave their recently “retired CEO and Chairman of the Board” $42 million dollars over the last 3 years.  American Airlines has lost money in the last 13 or 14 quarters of doing business.  The current price of an American Airlines piece of stock is .59 cents.  In 2006-2007 period the price of the stock was well over $30 dollars a share.  We won’t mention that in 2006 American Airlines determined in their wisdom that they needed to incentivize their Management Corps and started the process of giving out each and every quarter, even though the company lost money in each of those quarters.  This is not what we would call “Joint Sacrifice” exactly!

American Airlines is not the only company doing this.  This is the new Corporate Culture.   “Hey, this is all too complicated for just anyone to do!” said the folks at Goldman-Sachs!  “Unless I get my multi-billion dollar bonus – I will quit!”   They do need to quit by the way.  First of all, these upper management folks need to set the bar higher, when asking for sacrifices from their employees.  Try this Corporate Elite:  No bonuses for five years.  No Stock Options for three years.  Salary per year: $1 dollar.  Secondarily, all bonus money paid in the last three years…..needs to be returned to the company.  The Board of Directors needs 50% of its members to be removed and replaced based on “How they can deal with austerity but save jobs, keep pensions, retirement and health plans.”

American Airlines is not alone, simply the poster boy for how American Companies now operate in the Global Community.  Employees devotion, loyalty, caring and committment to duty are rewarded by drastically cutting every semblance of their security they can find.  Complain too much and they simply say:  “We will just close the doors!”  This is where Government needs to step in.  You cannot legislate ethics, morality or kindness.  What you can do is brutally penalize these folks for bad conduct, bad faith and bad behavior in the face of Global uncertainty.  When oil was $70 dollars a barrel, American bought future Hedged fuel at $120 a barrel.  That choice alone should have sounded the alert that NO more Bonuses should be paid American Airlines Executives.  That hedge by the way is now over…..and American is waiting for oil to hit $250 dollars a barrel before they do another hedge buy.

Corporate Raiders are out there looking for employee groups to rape, pillage and plunder.  The Greed is one sided.  They demand concessions and mortal sacrifice from the workers and employees.  For those sitting on the Board of Directors, in Executive Restrooms and Executive Cafeterias…….things are very different…with different rules.  Someone might mention in the course of this election cycle that “less government regulation” is not going to necessarily help anyone that works for new Corporate goals, let alone those who have dutifully worked several decades for a company when they thought had strong moral fiber and care for their workers.

Corporate Raiders, Greed and the American Airlines Bankruptcy!  Hopefully, someone has an idea!