US Airways may spin off frequent flier plan: CEO

[john john]

Increasing SHAREHOLDER value.

At any cost

 

[PHX PHLyer]

While spinning off the dividend miles program may be a short term benefit to the shareholders, it isn't in the best interest of the company. It doesn't make the company stronger or more robust in any way. In fact, the opposite can be said.

I agree that all of this talk about spinning off non-core businesses will only provide a short term gain to the company. Sure, it is probably more valuable as a separate entity, which would create short-term shareholder value....but what does it provide to long term shareholder value? Nothing much, really. Shareholder value is obviously at the core of the business, but it is when you have those shareholders that are short term investors who are in the business of get in quick, make money, then get out quick, that things get sort of thrown off and long term goals are put aside for short term goals. I actually like that Doug is kind of poo-pooing those investors by saying that they are not going to focus on short term gains that would derail momentum from focusing on longer term gains. It shows that he is looking long term, big picture, rather than at a short term payout.

 

[bofie]

Spinning off a core, business-relevant asset in exchange for a one-time cash burst is the essence of corporate raiding. Ultimately the "new leaner company" is usually a mess and unable to compete.

 

[PHX PHLyer]

Spinning off a core, business-relevant asset in exchange for a one-time cash burst is the essence of corporate raiding. Ultimately the "new leaner company" is usually a mess and unable to compete.

Hmmm.....not necessarily. Having too many business units can some times be a very bad thing for a company and can take their mind away from their core competency. Sometimes its much better for the company to divest business units and go back to focusing on what it does really well and exploit that instead of building its portfolio of business units. The frequent flyer program does not really fit the bill in terms of this, so I am not saying that US will be better off without it or anything to that degree. But I do want to point out that spinning off divisions or units can sometimes be the best thing for a company and not "corporate raiding" or leaving a company "a mess and unable to compete".

 

[bofie]

Hmmm.....not necessarily. Having too many business units can some times be a very bad thing for a company and can take their mind away from their core competency. Sometimes its much better for the company to divest business units and go back to focusing on what it does really well and exploit that instead of building its portfolio of business units. The frequent flyer program does not really fit the bill in terms of this, so I am not saying that US will be better off without it or anything to that degree. But I do want to point out that spinning off divisions or units can sometimes be the best thing for a company and not "corporate raiding" or leaving a company "a mess and unable to compete".

True, but the FF program would seem to be at the core of running an airline. To me anyway.

 

[FWAAA]

True, but the FF program would seem to be at the core of running an airline. To me anyway.

Agreed. Frequent Flyer plans are, to me, part and parcel of running a major airline, as opposed to, say, catering companies or corporate jet divisions or hotel chains, none of which are part of the core business of a major airline.

 

[Prince of PAWOBs]

Does ANYONE ever recall Doug Parker EVER mentioning Customers as his first priority? EVER as in since he took over America West??

As soon as I read the first post, I thought the exact same thing you did, Bob.

Increasing shareholder value increases DoUgIe's personal value. That's why it's Priority #1.

And that's why the airline that promotes "Business Casual" will eventually be the one that's refered to as "Business Casualty".