The Brancatelli File



July 25, 2002 -- So here's an intriguing idea: How 'bout us disgruntled frequent flyers pool our nickels and dimes, sell our miles for some investment capital and then buy out the airlines that make our lives so miserable?

I'm not joking, fellow travelers. Because besides their other well-chronicled faults, the block-headed martinets who run the nation's six largest mainline carriers have managed to run their airlines into the fiscal toilet.

As you can see by the chart below, the Big Six mainline carriers now have a total market capitalization of only about $5.5 billion. That's all six of them. Combined. Based on today's closing stock prices, we could call our brokers first thing tomorrow morning, order them to buy up every share of American, United, Delta, Northwest, Continental and US Airways and only need $5,515,000,000 to fund the purchase.








Total Market Cap.

American (AMR)







United (UAL)





$  4.17

$   233,000,000

Delta (DAL)







Northwest (NWAC)





$  8.37

$   718,000,000

Continental (CAL B)






$   897,000,000

US Airways (U)




$  4.48

$  2.65

$   179,000,000

'Big Six' Market Cap.



Okay, okay, I admit it. I am joking a bit. I do know we'd run into intractable antitrust problems if we bought up the six carriers that control almost 78 percent of the nation's traffic. Even the see-no-evil boys at the Bush Justice Department would probably look askance if we scooped up most of the nation's airline capacity in one trading day.

So what say we lower our sites a bit. Maybe we should just buy one airline tomorrow.

Want to buy American and liberate the nation's largest carrier from the arrogant boobs who are burning through $5 million a day? Based on today's closing price of $10.85, AMR Corporation, American's parent company, has a total market capitalization of only $1.6 billion. Or maybe we should scoop up Continental Airlines just for the fun of firing chief executive Gordon Bethune because we're tired of hearing him tell us we should be paying even higher fares. Based on today's closing price of $10.07 for Continental's B shares, we can own the entire joint--the almost totally mortgaged fleet, the holier-than-thou advertising slogans and the old PeoplExpress and New York Air memorabilia locked away in some closet down in Houston headquarters--for a mere $897 million.

Or maybe you're a bottom fisher? Well, have I got some junk stocks for you. US Airways closed at $2.65 a share today, meaning the entire airline is worth just $170,000,000. That's a bargain considering that US Airways has preliminary approval for a $900 million federally guaranteed loan. And, hell, we'd also get the US Airways Shuttle in the deal. After we ring the closing bell on the floor of the New York Stock Exchange, we can each grab a Shuttle flight--we're owners now, so we fly free!--jet down to corporate headquarters near Washington's National Airport and fire ourselves a few of US Airways' two dozen or so vice presidents.

You crave immediate command of an airline? Done. United Airlines, the second-largest carrier in the nation, needs a new chairman and a new chief executive officer. Based on today's closing price of $4.17, the entire airline can be ours for a mere $233,000,000. I suggest we play "CEO for a Day." Whoever happens to be passing through Chicago tomorrow can hop in a cab to United headquarters and run the show for as long as they are in town. After all, could any of us really do worse than the bumpkins who have lost more than $3 billion in the last eight fiscal quarters?

I guess the point I'm trying to make here is that the men who run the nation's major carriers have finally reaped what they have sown with their lousy service, dysfunctional fare structure, mindless management and repugnant attitude towards business and leisure travelers alike. They have destroyed the financial value of their companies.

As recently as September 10, 1998, when the Dow Jones closed at 7,865 (which is almost where it was before Wednesday's remarkable 488-point rally), the nation's Big Six carriers actually had some market value. US Airways was selling for $50 a share on September 10, 1998. United was trading around $62. Delta was hovering around $95.

And let's not blame the September 11 terrorist attacks for the state of the Big Six. United shares had lost half their September, 1998, value before September 11, 2001. Delta had dropped below $40 a share before September 11. US Airways had already dropped to about $12 a share by September 10, 2001.

Let me leave you today--I really have to call my broker--with a few other random statistics that will help you place the incompetence of the Big Six carriers in its proper perspective. Even though Southwest Airlines closed today at $12.06, about 45 percent below its 52-week high, its market capitalization was a hefty $9.3 billion. In other words, all by itself, Southwest is worth nearly twice as much as the Big Six combined.

Or how about these numbers: Thirty-month-old JetBlue Airways, which went public this spring, reported another profitable quarter yesterday. Today it closed at $40.85, which is 26 percent below its historic high. Still, its market cap today was $1.658 billion. That's more than the combined value of Northwest and Continental. And even though it carries just 1 percent of the nation's traffic, JetBlue's market cap is within $20 million of American Airlines, which controls more than 19 percent of the market.

One more thing. Forbes magazine says Microsoft founder Bill Gates, the nation's richest man, is worth $54 billion. Maybe a delegation of us disgruntled frequent flyers should approach Gates and ask him to buy up the Big Six. He could buy more than 75 percent of the nation's airline system for just a tenth of his personal wealth.

And, you know, I'd rather be at the mercy of Bill Gates than the bozos who have driven an entire industry into a piddling little business any old billionaire could pick up for pocket change.

A note to the readers: I do not invest in airline stocks or any travel-related company. The share prices and statistics quoted in this column are based on data available at

This column originally appeared at

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.