Skip to comments.The Big Corporate Rescue and the America That’s Too Small to Save
Posted on 09/14/2020 7:28:28 AM PDT by EBH
When the novel coronavirus swept through the travel industry in March, grounding flights and stalling airplane orders, TransDigm didnt wait for a congressional bailout in order to keep itself solvent. It didnt have to. On March 23, with a green light from Treasury Secretary Steven Mnuchin, the Fed announced that it would buy as much corporate debt as necessary in the form of bonds to reassure companies that they could raise money they needed to ride out the pandemic. Within a few weeks, the bond market had nearly regained the ground it lost, spurring a debt boom. U.S. companies issued a record $873 billion in bonds in the second quarter. Even highly leveraged companies seen as risky after years of aggressive borrowing, like TransDigm, got in on the action.
In April, the $27 billion aerospace manufacturer borrowed $1.5 billion in two bond offerings. The money is an insurance policy, Howley told investors, noting that it could come in handy if TransDigm wanted to pick up any more companies.
Unlike government loan programs set up to cushion companies affected by the pandemic, TransDigms support didnt come with strings. The company wasnt required to keep workers on the payroll or stop returning money to shareholders. Indeed, TransDigm said in April it would lay off up to 15% of its workforce, or nearly 3,000 workers. The next quarter, although revenues were down, those cuts allowed TransDigm to maintain its eye-popping 40% profit margin. Its share price has recovered most of the ground since March.
For small businesses, however, the programs were patchy, poorly administered and ultimately insufficient. The largest component of that aid, the $660 billion Paycheck Protection Program, kept thousands of small businesses afloat. But it was also maddeningly complex, and did not reach the companies that needed it most.
(Excerpt) Read more at features.propublica.org ...
Getting people back into the office to work is imperative for many service/convenience based businesses. The new work-from-home model is impacting everyone. And sadly if a micro-business owner cannot pivot...they will close.
With this thing called the Internet, I'm surprised it hasn't happend more. Work from home is/will be the future for many different sectors. Who wants to fight mobs in cities when you can do things from 'home' or travel and work.
—With this thing called the Internet, I’m surprised it hasn’t happend more. -—
I have been working from home (FL) for 8 years, my company is up north.
I have a feeling there will be no more SNOW DAYS...
For the most part they employ very low skilled workers at really low wages. I don't see the imperative in a macro sense.
Welfare state and ongoing handouts which no one wants, especially these very workers and employers.
“The next quarter, although revenues were down, those cuts allowed TransDigm to maintain its eye-popping 40% profit margin. Its share price has recovered most of the ground since March.”
And guess what happened to compensation in the boardroom?
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