"United to park dozens of jets" (Chicago Tribune article here). "Janesville facing future without GM" (Chicago Tribune article here) [note: Janesville, WI is a 63,000 person town in southern Wisconsin employing 2,200 in a local GM truck plant]. In both instances, company management is simply lopping off its use of assets – shuttering assets on its books – because it has no profitable use for them. Imagine that, owning dozens of airplanes or complete manufacturing plants and having no profitable use for them. Not even selling them, just not using them.
Regarding United "ground dozens of its ..aircraft..as part of a sweeping round of cuts intended to help the carrier conserve cash and survive as a stand-alone company in daunting times." When journalists talking about conserving cash to survive, it tells you this is a company on the brink of failure. Imagine you’re in the desert, running out of water, no one knows where you are, and you decide to just sit and not move so you can conserve your energy and remaining water. What will the end be? Baring a miracle, you’ve decided to die on the sands.
Regarding GM "Wagoner, the chief executive of General Motors Corp., made the announcement in Delaware: Janesville and three other plants will be gone because of a dramatic market shift from large trucks to fuel-efficient cars." Now, exactly to whom was this "dramatic market shift" a surprise – and even dramatic? Fuel prices have been going up for 5 years, and hybrid cars have been the hottest ticket for 3, and the decline in large truck/SUV sales has been happening since gasoline hit $2.50/gallon. What exactly has become recently "dramatic"? How about expected? Predictable? Planned for? Obvious?
Air India, Singapore Airlines, and Lufthansa are just 3 airlines that are expanding flight capacity profitably. Toyota, Honda and Kia are all growing capacity. Explosive growth is occurring at Tata Motors. The demand for travel and cars hasn’t declined – but you’d think so if you listened to executives from United and GM. Their Lock-in to doing what they’ve always done has caused them to miss market shifts that were as predictable as – the calendar. They blame market shifts. They should blame themselves. The headlines say it all.