Former Continental Airlines CEO: What Makes the Automakers 'Exempt from Reality?'

It’s special treatment for automakers, according to a former airline executive.

Gordon Bethune, the former CEO of Continental Airlines (NYSE:CAL [1]), now a CNBC contributor [2], told CNBC’s “Squawk Box” on Dec. 19 the political process is being substituted for what otherwise should be a bankruptcy judge in determining the fate of the big three automakers.

“Wow, what makes them exempt from reality? What are the bankruptcy laws invented for?” Bethune asked. “I mean – if it works in airlines, works in steel – what’s the matter with these guys? Why not have a judge decide instead of the political process? And, you know – you get some fairness in the federal court, so there’s no excuse for this whole debacle I don’t think.”

Bethune is famous for saving a beleaguered Continental Airlines from near liquidation [3] after it had filed for bankruptcy several times, giving him a different perspective on how to turnaround a failing corporation.

“The status quo is preferable to an unknown future and what a federal judge may kind of slice and dice you up to,” Bethune said. “Here’s – you know they got competitors, like a horse race, right? These guys got a 300-pound jockey on their butt. I don’t care how good of a car they make, that’s too damn heavy of a jockey. They got to clean it up and the only place they can do it fairly is in the courts.”

President Bush has gone forward with $17.4 billion in loans for auto companies [4], but Bethune says the bailout won’t work because of the political interests involved.

“[It’s] too political,” Bethune said. “You can’t do it because there is too many constituents that have a vested interest in the outcome. Let a federal judge cut it up on what makes these guys competitive again.”

Bethune told “Squawk Box” the strong will ultimately survive. He pointed to Toyota (NYSE:TM [5]), which just posted its first-ever operating loss in its history [6].

“The good ones will be there,” Bethune said. “Toyota may be taking a hit today, but they’re going to be back because they have good products and a good company and ultimately, we’re going to buy a car again. So, maybe you don’t have the confidence to buy a car today, but you’re going to buy a car sometime. Which one are you going to buy?”