Exploring poor business strategy at USAirways

The New York Times reports that USAirways is considering selling assets, including the DC-New York-Boston Shuttle.

While discussions appear preliminary, and the existence of discussions shouldn’t be overread, this seems ill-advised.

Selling assets will raise cash but do little to affect the underlying profitability of the enterprise. It’s likely that the only assets which will bring real cash are also the ones that are the most profitable or most likely to become profitable.

Sometimes it does make sense for a business to sell off productive assets — either because the business underutilizes those assets and they’re worth more to another business (and hence will fetch more cash in a sale than profits to the original owner) or because the business believes that they can invest the cash more productively in other enterprises.

In this case, it seems more like Pan Am selling their lucrative Pacific routes to United. If USAirways sells the Shuttle, or gates and slots at LaGuardia, then it is just putting off the inevitable. They should consider liquidation.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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