This raises future expectations. From now on, they will be expecting a handout when there’s a crisis, and be more likely to take risky actions!
I don’t understand the Boeing bailout. Their problems were self-inflicted with the 737 Max and the Air Force tanker, not a result of the Cornoavirus.
The U.S. government isn’t bailing out the airline industry to save air travel. It’s bailing out the airline industry so these companies can pay for all the new aircraft they’ve purchased from Boeing.
NN Taleb has written about "Skin in the game". If Business leaders take risks and profit from good outcomes but can offload to taxpayers the losses from bad outcomes, then business leaders will always favor risky ventures. That's not what you want.
All the airlines need is gap money and the ability to break the union stranglehold and the stranglehold isn’t going anywhere. Two months from now they’ll be making money hand over fist with cheap fuel prices.
Chew on this, most of the Unionized employees at the airlines will vote Democratic(socialist) come November.
I was never a fan of T.B.T.F. the last time around.
We had three big auto manufaturers, although they are not all ‘domestic’ corporations anymore, and a great history, but still I believe that a kind of darwinism for corporations is a good thing. If you can’t keep your ship seaworthy, it’s going down.
On the other hand, domestic airlines are a bit of a strategic concern. I remember saying over twenty years ago that we should pass a Domestic energy national security act where by the means of production, conversion (or refinement), and distribution should all be made robust and free from foreign influence. Well, in some ways, we’ve got there anyway, particularly with production. Airlines are not as crucial to the entire economy as energy is, but it should not be overlooked.
Small businesses should not be penalized for this whole mess, but to compare them in general to the airlines, I think, is just divisive. There are different standards for assessing their strategic importance.
The ones who are really screwed here are all the gig workers and freelance/independent workers.
No unemployment, no free money other than the $1200 bucks going to everyone else.
Meanwhile literally trillions and trillions to large corporations.
Screw the cattle car airlines. I don’t care. They sacrificed security for profit a long time ago, ala 911.
Money given to any business should be a loan, zero interest, repayment schedule to be determined by each businesses return to profitability. Any business that was not in good financial condition at the end of 2019 is not eligible. No handouts.
Airline bailouts should be conditioned on (1) Make all seats sized for current average American, at a minimum, (2) Make all onboard (or at least one on smaller planes) restrooms sized for current average American, at a minimum, (3) set up support animal to include dogs only and only when properly licensed and trained (such as those used by vets), and (4) Require full refund for any flight delayed on tarmac over 2 hours or otherwise over 4 hours. Give passengers some real bill of rights as condition for public bailout.
Airlines Shouldn’t Be Given Better Bailouts Than Small Businesses
Sure, no bailout, let them all go bankrupt, put all their workers on unemployment, let them sell apples, let them drink themselves to death, let them commit suicide.
It is not proper for the federal government to bail out small businesses or airlines.
I have no problem with necessary and proper tax refunds.
Metro NYC corporations might form Club 737 New York and buy financially distressed airliners.
Timeshares in airliners might be offered to Mayor Pete’s city and others.
I must be missing something.
The airlines want $29 in grants and $25 in loans that don’t indicate 0%. That is equal to $54B of which the $25 will be paid back from the loan at whatever interest rate determined. So the expenditure for the taxpayers is $29 billion with the loan money coming back with interest whatever that is.
The government wishes to give them $37 in grants, and $21 in a no interest loan that will pay back the $21 at no interest. So the expenditure. That tally’s up to costing the taxpayer $37 billion after the cows come home. I see spending $8 billion less on the top plus the interest coming back using what they want rather than what Uncle Sugar is trying to give them.
I don’t understand what the problem is here? The airlines are actually asking for less than the government is trying to give them overall and more up front. And they are appearing the villain?
Airlines are a source of more than just transporting people. United and American Airlines are two of the top 25 cargo carriers in the world. And each of them averaged around 4000 fights last year. There’s a lot not being said in the article. And her reasoning is flawed and inconsistent with the long term effects of the shutdown created by fear rather than numbers.
rwood
boeing was in huge trouble strategically before covid-19. using covid-19 as cover to give boeing a cash infusion is not very good imho. a cash infusion will not necessarily help boeing and its employees long term. boeing has apparently been doing stock buybacks up until mid 2019. trump has been going soft on boeing recently (1% of the american economy) but even trump can’t reverse the effects of boeing’s bad business strategies.
Only give them money if they make the seats bigger with more legroom.
Frankly, part of me was hoping the deal would fall through.
The airlines should either save themselves or work it out through bankruptcy. That’s what bankruptcy is there for. The airlines can still operate in Chapter 11, and if they can’t, someone else will buy their assets and fill in the gap.
I don’t have any problem with stock buy backs, but airlines’ shareholders enjoyed the benefits of the buy back and should bear the cost when the risk didn’t pan out and their shares go to zero. If you buy stock in a company with a thin balance sheet, you bear the risk that the company will go bankrupt if when is a down turn.
That small business owners were left out is unsurprising. Small business owners and the self-employed are the red headed step children of American politics. Democrats hate them because they aren’t dependent and don’t fit into their class-warfare worldview. Republicans mouth platitudes about them but really couldn’t care less about them.