Rico,
with all due respect, the loans GE made to DL and what other lenders made to other airlines such as AA and NW that have recently tapped the capital markets are different purely in the sense that private, commercial markets were not willing to loan US the money they needed unless the government had provided guarantees that those loans would be repaid. Yes, nearly all of the legacy airlines have virtually all of their assets encumbered in order to secure their debt but US is the only legacy airline that had to ask for government backing to obtain financing.
As has been pointed out before, the US governmet will not lose money on US because they are the highest priority guarantor of US' debt. However, I do not believe other creditors will allow the ATSB to assert its priority on secured real property assets such as aircraft. The ATSB could very well allow US to run down its reserves to the point that the loan is secured by the value of its slot holdings and operating rights.
Further, other airlines are cutting costs and generating new revenues as well so US is not gaining an advantage that other carriers cannot also gain if not surpass. Airlines such as AA, CO, and DL have built their turnaround plans around significant increases in capacity which serves to lower unit costs. UA and US are both shrinking their operations or replacing mainline capacity with regional jets which have higher unit costs. Regional jets work well in tapping new revenues but they do not work very well at increasing profits in a diminishing revenue environment such as we are in now.
Michael,
glad you're back. The airlines cannot raise fares now as evidenced by the continuing decreases in average fares. The actual lowest fare is not shrinking but airlines are losing the ability to sell a proportion of tickets at the higher fares and it will only get worse as several legacies and all LCCs continue to expand capacity over the next few years. Nobody has advocated a monopoly but there is no example in the world where an airlines or other heavily capital intensive transportation enterprises are profitable in a completely market driven economy. While it might help stabilize the industry somewhat if one or two major carriers failed, there is too much capacity that will flow back into the industry for it to be profitable for quite some time. The only way the airline industry will be profitable is for there to be some controls on the amount of capacity in the industry - something Washington is loathe to do. In the absence of those controls, the weakest carriers must be allowed to exit the market. In that regard, the Europeans understand the industry far better than the Americans because they have demonstrated a willingness to let European carriers fail despite much stronger nationalistic ties to their carriers than what any US airline has.
