Why should we Bail out the Cruise industry?

[aja8888]

I don't see why bond holders should not also get wiped out. They took a risk when they purchased the higher yield corporate bond. Wipe out stock holders AND bond holders, then bailout. Executive salary capped at 10x the lowest paid employee.

I would also add the condition that the current Board of Directors gets booted as they approved the actions (and compensation) of the CEO and let the business falter.

 

[BeachOrCity]

I don't see why bond holders should not also get wiped out. They took a risk when they purchased the higher yield corporate bond. Wipe out stock holders AND bond holders, then bailout. Executive salary capped at 10x the lowest paid employee.

Well it depends on which type of bond. The bond holders frequently have a security interest in the assets of the corporation (think airplanes, ships, factory equipment).

Without the company those assets are worth less, hence the "haircut", but they have a legal right to those assets, and they could theoretically sell them to another company if the corporation defaults on the bonds.

As for giving all the corporate leadership the boot, the whole purpose of these organized bankruptcies is to ensure the business activity survives. And contrary to many peoples opinions, a big chunk of the leadership (not all) is needed to make that happen.

 

[Go-NoGo]

Saudi Arabia’s PIF takes 8.2% stake in cruise operator Carnival:

You might need a subscription to view:
https://www.ft.com/content/8dd37fe5-64d0-4524-b115-86aa5a6a7bd0

"Saudi Arabia’s Public Investment Fund has built an 8.2 per cent stake in struggling cruise operator Carnival, marking the Gulf fund’s latest high-profile direct investment.."
..
The purchase marks a rare sign of investor confidence in an industry that has been battered by the effects of the coronavirus pandemic, which has killed passengers and left cruise ships pleading with countries to be allowed to dock"

Clearly someone has more information than the rest of us retail investors.

 

[Nemo2]

Saudi Arabia’s PIF takes 8.2% stake in cruise operator Carnival:

Alcohol free cruises, with live sheep in the hold for Hajj sacrifices - sign me up!

 

[MichaelB]

Clearly someone has more information than the rest of us retail investors.

Or got a really good price.

 

[Go-NoGo]

Or got a really good price.

AND got a really good price

 

[MichaelB]

AND got a really good price

Yes, both.

 

[kcowan]

I don't know. I'm 67 and while I don't need anyone to babysit me in Europe, I'm finding that the wonderful thing about the small-ship cruises and the group tours I've taken (India, Nepal, South America- places with which I have less familiarity) is that it's a great relief to know that if something goes wrong someone else will fix it. ...

We were in Pisa and encountered a guy who was lost. He was from a cruise ship and missed the departure bus. All he had was his ship ID pass.

We lent him $100'for a taxi to the dock and phone the cruise lines in Ft Lauderdale to advise them to delay departure. He made it.

He had our contact info so he could return the money. He forgot so we tracked him down and got the money. Perfect guy for a cruise!

 

[GTFan]

Instead we are handing the airlines 50 billion with little to no conditions other than stock buybacks and exec comp.

C'mon man, 90% of their traffic just went poof through no fault of their own, and they're all American corps with hundreds of K employees. More importantly, air travel is essential to the economy AND to national defense (under gov't air reserve rules in wartime).

This has absolutely nothing to do with the OP, which is entirely foreign companies that do everything they can to avoid our rules, regs, and taxes and are completely non-essential.

 

[davebarnes]

Search The Google for "Under Foreign Flags: The Inequitable Avoidance of U.S. Taxation by American-Owned Ships"
Download the PDF and become angry.

 

[BeachOrCity]

C'mon man, 90% of their traffic just went poof through no fault of their own, and they're all American corps with hundreds of K employees. More importantly, air travel is essential to the economy AND to national defense (under gov't air reserve rules in wartime).

This has absolutely nothing to do with the OP, which is entirely foreign companies that do everything they can to avoid our rules, regs, and taxes and are completely non-essential.

I agree completely the airlines need to be kept in business. Where I disagree is they should have been given the choice of taking a loan that has to be paid back or put in an orderly bankruptcy where stock holders get wiped out but the airline and job (most anyway) are able to continue. This is how it was done for GM.

Btw. Royal Caribbean is a US company. Still are able to avoid most taxes. But that’s not the point. The point is stock holders take risk of being wiped out whether it is the company’s fault or not

 

[Rustic23]

If major industries declare Chap 11, and reorganize, what does it do to a large number of people that have their savings in the market, including many if not most on this board. I could see a large portion of the S&P 500 gone if this drags on.

 

[JustCurious]

On top of that they also have to convince people to start using their services again. Many people may be happy with some of their current alternate arrangements of working out at home, cooking more, not bowling, etc.

I disagree. I think this period of isolation will have the opposite effect...people will be even more eager to go out once this is over.

 

[JustCurious]

Clearly someone has more information than the rest of us retail investors.

Or, they have the same information but have an different view...they are optimistic that people will start cruising again once this is over. I agree with them.

 

[GravitySucks]

If major industries declare Chap 11, and reorganize, what does it do to a large number of people that have their savings in the market, including many if not most on this board. I could see a large portion of the S&P 500 gone if this drags on.

Yup.
And that's what all of us signed on for when we bought those equities.

 

[Dtail]

If major industries declare Chap 11, and reorganize, what does it do to a large number of people that have their savings in the market, including many if not most on this board. I could see a large portion of the S&P 500 gone if this drags on.

I believe the largest movie chain AMC, is already in talks with bankruptcy lawyers.

 

[Clone]

Perhaps one of the outcomes will be that the US (government) re-evaluates how we allow companies (such as pharma) to be headquarter in other countries (such as Switzerland), manufacture in other countries (such as Ireland or India) so they can market here and be protected by the FDA. Especially when one of the first concerns was that these companies were going to not be allowed to export drugs from where they were being manufactured to the US (I believe certain drugs were going to not be allowed out of India). We should not allow unreasonable protection to companies that are sheltering profits and manufacturing elsewhere. The definition of unreasonable is left to the reader...

...

 

[YVRRocketSurgery]

NCL showing signs of trouble as it needs to sell equity and bonds to raise cash to continue funding operations.

 

[OldShooter]

Perhaps one of the outcomes will be that the US (government) re-evaluates how we allow companies (such as pharma) to be headquarter in other countries (such as Switzerland), manufacture in other countries (such as Ireland or India) so they can market here and be protected by the FDA. Especially when one of the first concerns was that these companies were going to not be allowed to export drugs from where they were being manufactured to the US (I believe certain drugs were going to not be allowed out of India). We should not allow unreasonable protection to companies that are sheltering profits and manufacturing elsewhere. The definition of unreasonable is left to the reader...

Wow. Think that one through a bit, @Clone. Something like 40% of the S&P 500 revenue is from overseas. Do you not think this is a 2-way street where US companies would receive the same treatment from their customers that you are proposing for us? We do need some diversification of supply chains. That has become obvious and it will happen, but the logical end of it is not a bunch of self-sufficient countries that don't trade with each other.

With respect to drugs, the FDA's job is to protect us, not the drug companies. The people protecting the drug companies are in Congress, which has led to our having the highest drug prices in the world. Congress has protected drug companies from price negotiation and even prohibited us from individually importing cheaper drugs.