Bailouts (Airlines)

[Jerry1]

This article was in the news this morning:

https://www.detroitnews.com/story/b...-plead-billions-virus-grants-loans/111429912/

I recognize that, as usual, the taxpayer will have to take the brunt of this current crisis, however, I have a really hard time feeling like the airline industry shouldn't go to the back of the line. After treating us like cattle and providing little more than bus service in the air, I hope some of the support comes with strings attached. Take a couple rows out of each plane and stop charging for baggage would be my dream. But alas, it is but a dream. We'll bail them out and they'll thank us by making it even worse to travel by plane.

 

[ivinsfan]

My problem with this is the huge amount of money airlines have spent on a stock buybacks.

No point in saving for a rainy day then?

 

[Helen]

My problem with this is the huge amount of money airlines have spent on a stock buybacks.

No point in saving for a rainy day then?

This ticked me off too. It seems the CEOs only care about short term profits, maybe it's because they know they will receive a hefty exit bonus if they screw up?

 

[Another Reader]

Chapter 11 and debtor in possession financing. Stop rewarding the bad behavior.

 

[Freedom56]

Boeing is looking for a short term bailout also. This is a company that spent $42B in the last five years buying back stock instead of investing in engineering. It is dragging down the Dow Jones index today.

 

[Chuckanut]

Only if lots of strings are attached:

1. Loans that must be paid back.
2. Break up the Big 3 to restore competition
3. Minimum standards for things like seat width, distance between seats, restroom size and the number of restrooms.
4. Restrictions on the terms of non-refundable tickets.

 

[Starsky]

My problem with this is the huge amount of money airlines have spent on a stock buybacks.

No point in saving for a rainy day then?

This^^^^^^^! x1000

 

[gerntz]

What degree of ownership does the country get for this?

 

[MrsHaloFIRE]

DH suggests that if theres an airline bailout, its a trade. Heres some govt money, now give us the stock.

 

[VanWinkle]

Let's just let the government take over the Airlines, everything works smoothly with everything else they control........

 

[gerntz]

Let's just let the government take over the Airlines, everything works smoothly with everything else they control........

Ownership doesn't mean running it. But no use letting others get bailed out.

 

[razztazz]

ALL of these things should be widely reported. not just stories about bankruptcies yabba jabba... get all this seemy BS on the table then gauge public reaction.

 

[tulak]

Times like these show that our system is busted. Of course we’ll bail these companies out, because we can’t let the airlines, Boeing, etc, go bankrupt. This isn’t much different than any other time in history when markets crashed.

Boeing is a great example. The executive management did a terrible job and walked away with lots of cash. It could also be that this crisis helps them, since it gives them a scapegoat for their past business decisions. Aka, it’s not my fault! We didn’t expect a market downturn...

Oh well. I’m not sure how to fix this issue. The best I can think of is mandatory cash reserves before allowing stock buybacks/dividends.

Ideally, we’d let these companies fail, but that’s too high a cost for society.

 

[Masquernom]

You should read the story of Boeing's recent history. How they moved corporate headquarters to Chicago so executives wouldn't get tied down with production issues. I believe it was also a Boeing CEO who had the new idea of building planes the way movies are made several years ago?

 

[Scrapr]

Let's just let the government take over the Airlines, everything works smoothly with everything else they control........

I think the Italians just nationalized Alitalia. They were deep into loans with them anyway

And when the US airlines get bailed out we are gonna get no baggage fees....for life! that would help all the congestion in the main cabin with extra luggage

 

[6miths]

Let's just let the government take over the Airlines, everything works smoothly with everything else they control........

So if it really is capitalism, a free market then don't give them a penny. Let them fail if that is their lot. Creative destruction. The free market will sort it out right. Big business just loves to have our cake and eat it too.

 

[DallasGuy]

Give them a loan with an 18% interest rate just like the credit card companies do. Let's see how creative they can get in preparing for the next crisis with these terms.

 

[Dalmore]

Give them a loan with an 18% interest rate just like the credit card companies do. Let's see how creative they can get in preparing for the next crisis with these terms.

+1

 

[Just_Steve]

Let the airlines crash and burn, if the routes are profitable someone take them over.

 

[travelover]

Only if lots of strings are attached:

1. Loans that must be paid back.
2. Break up the Big 3 to restore competition
3. Minimum standards for things like seat width, distance between seats, restroom size and the number of restrooms.
4. Restrictions on the terms of non-refundable tickets.

5. Free luggage
6. Free peanuts

 

[gauss]

Two words:

Moral Hazard
(noun) lack of incentive to guard against risk where one is protected from its consequences, e.g. by insurance.

 

[Redbugdave]

So if it really is capitalism, a free market then don't give them a penny. Let them fail if that is their lot. Creative destruction. The free market will sort it out right. Big business just loves to have our cake and eat it too.

Yep! A subsidy distorts a true market system. Let the chips fall as they may. The opening will allow others to compete and be competitive.

 

[MichaelB]

If there are rescue funds for the airlines, some of the money should be set aside and used to reimburse all the passengers who have lost or are losing money because of unreimbursed cancellations.

 

[Midpack]

Lots of valid criticisms here, but again we’re not acknowledging the role passenger-customers and shareholders have played.

Passengers are treated like cattle because most passegners rewarded lowest fares above all else. The no frills ultra discount airlines grew while the traditional incumbents lost ground - they had to adapt because most of us were too cheap to pay for more room/service. You can still buy a first class seat if you want more room. But it’s disingenuous to demand lower fares and the same or more room/service - can’t have both.

There’s no forgiving some of the short term thinking some boards and execs have engaged in but shareholders and analysts instantly punish these companies stock prices if they fall short of expectations even a little.

More often than not we get what we deserve in politicians, media, airlines - you name it. "We" like to throw stones and act like innocent bystanders but "we" almost never are.

 

[Bamaman]

The airlines are like our merchant marine fleet--able to be commandeered by the Federal Government in times of war. They are an important cog in the security of the world to move people and munitions around the world.

We need a strong and capable group of airlines for the security of the world, but this is an extremely capital intensive business. I watch FlightAware.com often, and you would not believe the hundreds and even thousands of airplanes that are up in the air at certain hours of the day/night. Airlines are even a much larger part of the world economy than anyone realizes. I honestly have no idea where they come up with enough trained pilots to man all the commercial airlines and private aviation.

But we need enough viable airlines to make flying competitive on prices--and to keep the cost of flying down. And with the monthly payments on mortgaged airplanes and leased airplanes extremely high, there's no company able to be viable to cash flow operations when there's no source of income. And some airlines have 40%, 75% and even 100% of their fleets sitting on the ground. Something has to give, even if the government must get into the game.