Delta Air Lines has plenty of cash. They never furloughed any employees. Travel is recovering and they’re expecting to return to profitability this summer. They’re even making large bonus payments to management employees.
Against this backdrop, Hunter Keay from Wolfe Research asked Delta CEO Ed Bastian during the airline’s earnings call whether they would turn down ‘PSP3’ the third government airline bailout that will offer them about $3 billion in exchange for continuing to pay employees through September.
Bastian’s reply was succinct: “we don’t anticipate turning that down, no”
For Delta this is basically $3 billion in free money, with restrictions on top executive pay and share buybacks through September and the need to offer the government a small portion of the bailout back in the form of stock warrants.
The largest U.S. airlines, led by Delta, ran a years-long campaign to get the U.S. government to limit flights by Emirates, Etihad, and Qatar. They expressly sought to limit customer choice and raise fares. Their argument was predicated on the idea that those Gulf carriers were supported by their governments, and what they wanted was a free market in air travel without subsidies.
Last month Delta did an about face with Bastian declaring that the strength of the U.S. airline industry is because of “support of Congress.”
During the earnings call Bastian underscoreed that U.S. airlines are doing better than international partners because other countries have failed to provide subsidies to the same extent that the U.S. government has. And he credited the lack of U.S. airline bankruptcies to “to the government support..as a national priority”
Yet an analyst asked later in the call whether the massive subsidies Delta has received in the past year changes the airline’s position of subsidies for international airlines, and the carrier hemmed and hawed and then said it would not, “that’s an interesting question..and certainly we’ve been dependent on the support from our government here to sustain an essential service for our country. I don’t know what that means for the long-term.”
Finally they settled on the argument that Mideast subsidies are fundamentally different because they were meant to ‘grow’ their economies not to ‘sustain’ them. So “I don’t think it changes the character of what our issues were in the past.” Of course government protection for U.S. airlines is just another form of subsidy but it falls on the back of consumers rather than taxpayers.