I didn't get a flood of responses to my 2/22 post raising the question of why there's been no airline M&A. But Jack Miller, from South Carolina made some excellent points on Tuesday.
"The airline business is very highly leveraged. This is from an operating point of view and from a financial point of view. The surviving airlines will quickly go from losing millions to making millions. Your competitor has all the capacity it can use and is trying to hang-on until the turn. He is already head over heels in debt and needs no more. If you do not make the turn, he gets his share of your business without paying you a dime. In the mean-time, GE is willing to lend billions to the airlines using the planes as collateral. GE wins when airlines hang-on through the down turn."
Some of Miller's thoughts are echoed in a New York Times article that Sheldon Libor (who originally raised the question), brought to my attention on Monday: "Even for the Sickest of Airlines, Financial Skies Can Be Friendly."
"Here is a partial answer," writes Sheldon. "All the losers are being artificially propped up."
Anyone else want to chime in?