This is a story–don’t worry, it will be a short story–about how the current subprime mortgage/credit crisis has actually shot down an entire airline and how this may just be the canary in the coal mine.
The all-business class airline, Maxjet Airways, based in Dulles, gave an extraordinary Christmas gift to its loyal customers: It filed for bankruptcy, ceased to fly and left its customers virtually stranded in London,New York,Las Vegas and Los Angeles. That’s the holiday spirit for you.
Maxjet, mind you, was no American or United Airlines–it actually served food!!–and has been struggling since its inception in 2005.
In my professional role as news reporter, I went out to LAX this afternoon to check things out only to find that Maxjet literally vanished into thin air…well, in L.A. I guess it’s more like thick air.
What was its ticket counter at the Bradley International Terminal was no more; not even a sign telling of its demise. Strangely, the departure sign overhead still listed its 4:50pm flight to England as being “on time.”
Now by this time, you may be thinking, What does all this have to do with the subprime mortgage crisis and why am I reading about an airline on a real estate investing website?
The company blamed two things as the main reasons the airline folded its wings: the rising cost of jet fuel, and the inability to get more credit to keep its planes flying.
The “credit crunch” as Maxjet put it, is the direct result of the now global, U.S. caused subprime mortgage disaster. The ripple effects from the housing crisis are fast becoming large,crashing waves.
The world’s economy is so interconnected nowadays, that if you drop your ATM card by accident in Chicago, a bank customer in Laos will get hit with the bill for the replacement card.
The credit crisis–which is pretty much what the mortgage debacle has become–is now sapping the strength from businesses entirely unrelated to real estate.
It’s not money, in the 21st century, that makes the world go round, it’s credit. And, as credit stops flowing, the world’s economy –the ENTIRE economy suffers. That is what we are seeing here with the end of Maxjet Airways. A victim of our time and a victim of someone’s unpaid mortgage in Kansas City.