Originally Posted by
pbarnette
But I think the same could be said of Bethune at the end. He saved CO, yes, but I'm not sure that he really positioned it for sustained success. I think that the trends which LK struggled to handle may have simply been too far along to stop by the time he came to lead the airline. Then again, maybe none of the legacies were ever in a position to succeed in this era, and perhaps those problems go back before even Bethune?
I find a lot of posts on this thread WAY too introspective. Let me offer you a comparison:
Taking the financial years 2004-8, CAL seems to have grown revenue from $9.4 to $14.2 billion with a total operating margin over 5 years = $0.6 billion. In other words, it's operating margin was a miserable 1% of revenue - CO simply doesn't look self-sustaining any time soon with these results.
By comparison, over the same period, LUV grew revenue from $6.4 to $10.7 billion with a total operating margin over 5 years = $3.3 billion.
They're close to the same revenue but the gap in performance is obviously reflected in todays market cap (LUV is about 3.5x more valuable than CAL) and in the net worth in the balance sheet (LUV is healthy, CAL is close to zero)
Quite simply, one business is healthy enough to ride out the current storm, the other is financially hanging on by its fingernails.
The writing has been on the wall for over a decade. CO have had years, and trips through Bankruptcy to figure out a sustainable business model but they either don't have the imagination or the managers have ducked the difficult changes.
It's not so much that the legacies aren't in a position to compete, it's that the managers have failed to get them into a position where there's a financial reason for the existence of the business. The real legacy is, therefore, another 5 years of lost opportunity - simply hanging on, waiting and hoping for a reduction in competition is caretaking not management.