The Wall Street Journal’s ($) Holman Jenkins addresses the sad state of the airline industry in his Business World column today, and hammers home a point that this previous post made about the ownership stake in the reorganized United Airlines that the debtor-airline is proposing to foist on the federal government under United’s pending reorganization plan:

“Let’s not delude ourselves: Through the bankruptcy and pension insurance systems, Washington is already engaged in a bailout — an incoherent and self-defeating one.”

Read the entire piece, and feel free to peruse this long line of posts over the past couple of years on the sad state of the airline industry.
After the economic shakeout of the early and mid-1980’s — which included the demise of the savings and loan industry — the federal government ended up owning large inventories of foreclosed real estate and related assets in the wake of failed lending institutions. A number of entreprenuers bought those assets from the government for pennies on the dollar and deployed the assets in properly capitalized businesses. It’s beginning to look as if a similar market in government-owned airline securities is developing, and it will be interesting to watch if a government sale of those securities at rock-bottom prices will prompt the type of true reorganization from a capitalization standpoint that the American airline industry desperately needs.