bailout

Tag Archives for bailout.

No, Airline Bailouts And High Debt Don’t Have To Mean Frequent Flyer Devaluations

by Gary Leff on November 4, 2020

Nov 04 2020

Andrew Kunesh writes at The Points Guy website that a second airline bailout may mean frequent flyer program devaluations, and calls for legislation providing for the bailout to require airlines “not to devalue their loyalty programs until government funds are paid back.”

However there’s no fundamental reason that a bailout means loyalty program devaluation, any such restrictions are likely to be toothless in any case, and aren’t going to make it to the top of any legislator’s or regulator’s agenda.

J.P. Morgan Chase: Airlines Will Get Second Bailout, Come Back For Third Because Why Not?

by Gary Leff on October 28, 2020

Oct 28 2020

Jamie Baker, in a research note for J.P. Morgan Chase, points out that if airlines get another ‘payroll support’ bailout they’d have to spend some of that money on extra payroll. In other words it isn’t all money straight into the kitty.

But will it happen? Baker says a new round of subsidies will happen (“We believe PSP 2.0 is a question of when, not if”). And then expect airlines to come back again for a third round.

American Airlines CEO Scoffs At Fringe Republicans Who Don’t Support Another Airline Bailout

by Gary Leff on October 21, 2020

Oct 21 2020

American Airlines CEO spoke to a group of pilots a question and answer session posted to the company’s intranet on Monday. In his introductory remarks he talked about the politics of the next coronavirus stimulus bill, which includes more payroll support for U.S. airlines.

He suggested that it’s only “a handful of really fiscal conservative Republicans who just think you know, who just viscerally disagree with the government doing anything that looks like you might be funding a business” who push back on another $25 billion airline bailout.

White House Proposes $20 Billion For Airlines, And Some Are Complaining

by Gary Leff on October 1, 2020

Oct 01 2020

The White House proposal is now $20 billion rather than $25 billion as they try to find common ground between their $1.6 trillion number and the House’s $2.2 trillion. They’re trying to find a deal with $5 billion for airline shareholders and creditors getting shaved in the process.

A $2.5 Billion Airline Payroll Support Plan Makes More Sense Than What The Airlines Asked For

by Gary Leff on September 19, 2020

Sep 19 2020

Airlines have somehow conned the President, the Speaker of the House and myriad members of the House of Representatives and the Senate to sign onto the idea of a $25 billion ‘clean extension’ of CARES Act payroll support. That’s a second $25 billion injection of cash in exchange for not furloughing workers or eliminating service to most cities through March 31, 2021.

Except that the math here is truly insane. No one seems to be doing the math. So let’s talk about what a $2.5 billion package might look like instead.

Commerce Secretary: Not Giving Airlines Another $25 Billion In Taxpayer Money Is “Punishing Them”

by Gary Leff on September 18, 2020

Sep 18 2020

You wouldn’t buy the basic economy tickets airlines were selling, but they’re going to take your money anyway.

President Trump’s Secretary of Commerce Wilbur Ross said on Friday that not giving airlines another $25 billion, after providing $25 billion in payroll support and another $25 billion in subsidized loans, is akin to punishing them:

Four Reasons ‘Payroll Support’ Is Really A Bailout For The Airlines

by Gary Leff on September 17, 2020

Sep 17 2020

Politicians from both sides of the aisle, along with the President, have publicly supported a second airline bailout in the form of a ‘clean extension of CARES Act payroll support.’ That would mean another $25 billion over 6 months to the airlines in exchange for holding off on employee furloughs.

However this hasn’t happened because it’s caught up in negotiations over a larger package, that some observers say is now unlikely to happen. Since furlough restrictions expire after September 30, some airlines are expected to let go of workers starting October 1. That’s seen as a deadline for Congress to act (or for the President to take some form of executive action, as he’s suggested he could).

October 1 isn’t really a hard deadline, though.

Airlines Left Out Of Latest Stimulus Plan

by Gary Leff on September 8, 2020

Sep 08 2020

When calculating the cost of ‘jobs saved’ for six months via a ‘clean extension’ of CARES Act payroll support, we were looking at a cost of $333,333 per job since most of the money goes to fund payroll that airlines will have whether a bill passes or not. In other words it funds $200,000+ a year pilots and it funds the salaries of executive management, having taxpayers pick up the tab rather than shareholders and creditors.

Now though against actual announced furloughs we’re looking at a cost of about $625,000 per job saved – and many of those will just mean job losses six months down the road.

Former Spirit Airlines CEO Takes On My Argument Against Airline Bailout

by Gary Leff on August 26, 2020

hand holding hundreds of dollars in cash

Aug 26 2020

In Baldanza’s Forbes piece he laid out reasons he thought bailing out the airlines were a good idea. He argued that robust airlines are important for economic recovery.

In his response to what I wrote, though, he collapses back to the argument that the money is largely going to benefit employees and not airlines (or airline investors) – and that’s not where his original argument was strongest.

President Trump May Take Executive Action To Avoid Airline Furloughs