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...American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load... so that it can slim down and cut costs.
American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.”
Paying your debts is, as a rule, a good thing. But the double standard here is obvious and offensive. Homeowners are getting lambasted for doing what companies do on a regular basis. Walking away from real-estate obligations in particular is common in the corporate world, and real-estate developers are notorious for abandoning properties that no longer make economic sense. Sometimes the hypocrisy is staggering: last winter, the Mortgage Bankers Association—the very body whose president attacked defaulters for betraying their families and their communities—got its creditors to let it do a short sale of its headquarters, dumping it for thirty-four million dollars less than the value of the building’s mortgage.
Kodak has a huge pension pot, as well as other obligations to its retired and current workforce, and yet doesn't make enough cash to turn a profit. The beleaguered camera biz preferred to pay dividends until May 2009. Kodak has been run for years by bureaucrats unaware of the digital barbarians overrunning their market until it was too late and the company's executives reacted in a misdirected panic.
The people running Kodak have got to accept that they are responsible for its demise and can't save it. Kodak needs new leadership, vision, energy and decisiveness to cut out the vast acreage of dead wood products and services, identify and support the growth businesses - and we don't mean ink-jet printers - and shrink Kodak back to a viable core while these businesses grow and save the company.
Ironic, considering it pioneered digital photography.