bailout

Tag Archives for bailout.

No, A Government Airline Bailout Wasn’t Necessary, And Just Makes Things Worse

hand holding hundreds of dollars in cash
Mar 30 2020

The U.S. airlines have long survived on government cash and government protection from competition (whether through foreign ownership, or long term gate leases at government airports). We continue to feed that, and then complain when effectively nationalized airlines don’t deliver the product consumers want. We have only ourselves to blame.

A bankruptcy-first approach would have meant equity and creditors take a haircut before taxpayers. It’s not at all clear a bailout would have been needed even then.

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American Airlines President Robert Isom Says No Bailout Needed, Will Take The Money Anyway

Mar 19 2020

In London just in advance of travel restrictions going into effect, American Airlines President Robert Isom traveled across the Pond to speak to employees there. American employees nearly 1000 people in the U.K.

He spoke at the British Airways headquarters at Waterside, and said that while they aren’t going to spend “even a dollar” that they do not have to, they owe it to customers not to degrade the inflight experience and that the company is “prepared to weather any type of storms that come up and says there’s “enough cash on hand to weather downturns in the business.” And that was before they picked up another billion dollars just today. Still they want to ensure that if the government is handing out money, they’re well-positioned to get some.

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Crazy Times Bring Out Dumb Ideas, and Nationalizing Airlines Is The Worst

Mar 18 2020

Former White House Chief of Staff and former Chicago mayor Rahm Emanuel is known for saying ‘never let a crisis go to waste.’ It’s an opportunity to push an agenda. So as the airline bailout train leaves the station some people are advocating the consumer protection rules that they wanted anyway. Others (like Alexandria Ocasio-Cortez) want the financial reforms they want anyway.

If you hate air travel you want to use this crisis to nationalize the airlines, an idea put forward by the left wing American Prospect.

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Don’t Ban Stock Buybacks Or Impose Consumer Protection Rules As Part Of An Airline Bailout

cash
Mar 18 2020

Airline bailouts are a bad idea. Stockholders should take a haircut before taxpayers. Airline bankruptcy does not present contagion risk to the economy. Airlines have flown through bankruptcy successfully – American, Delta, and United have all done it. And any help for workers should address the needs people face independent of industry.. Working for an airline isn’t ‘more special’ than some other job.

However there are very bad ideas circulating around new conditions to impose in exchange for a bailout.

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When Everybody’s Bailed Out, Nobody Is

Mar 17 2020

Hotels are in line right behind the airlines looking for a bailout – even the Walt Disney Company. So are airport workers, and now Boeing is raising its hand too. We need to reserve government’s response for where it makes the most leveraged difference to society as a whole. There are lessons from China on what’s coming down the road.

The economic challenges aren’t primarily in travel, that’s just what’s slowing down first, and when everybody is bailed out no one is.

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