Most Airlines Could Be Bankrupt By May. Governments Will Have To Help. (cnn.com) 237
Global aviation is shutting down because of the coronavirus outbreak and travel restrictions designed to contain it, and many airlines will need government bailouts within weeks or face bankruptcy. From a report: Airlines across the world are grounding planes, laying off workers and scrambling to preserve cash as measures to contain the outbreak prompt flight bans and wipe out global travel demand. The three biggest global airline alliances, oneworld, SkyTeam and Star Alliance, urged governments to "evaluate all possible means" to assist the industry. They represent more than 58 of the world's leading carriers. Some European airlines have already issued urgent appeals for help. According to CAPA Centre for Aviation, a consultancy, most airlines in the world will be bankrupt by the end of May unless governments intervene. "Coordinated government and industry action is needed -- now -- if catastrophe is to be avoided," the firm said in a report published Monday. "Cash reserves are running down quickly as fleets are grounded, and what flights there are operate much less than half full," it added.
Of course they'll get a bailout (Score:5, Interesting)
Of course they'll get a bailout but how many small businesses will get the same?
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No shit.
I used to have a small business. I would absolutely lose it and have to declare bankruptcy if I had it right now, due to the $6500/month lease.
The govt would not do SHIT for me.
How many broken eggs is that omelette worth? (Score:2)
I'd say more about your comment, but your pro-anonymity user name changed my mind. However you did introduce the "value" topic that this reply will focus on. (Yeah, AC might have said something relevant even sooner, but who cares?) The key "local" question of this story is mostly about deserved versus undeserved bankruptcy, whether we're talking about a gigantic airline or a small business.
My premise is that bankruptcy is painful and expensive and not the best way to improve companies. It's more questionabl
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If it's so important, how is it that most people have never traveled by plane in their entire life?
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If it's so important, how is it that most people have never traveled by plane in their entire life?
Most people have never needed major surgery, and yet trauma centers are certainly justified.
Most people have never physically stepped on a battlefield with an assault rifle. And yet there's an armed military force in every major country.
Hope that clears up how most people can be dead wrong with their short-sighted thinking.
Re: Of course they'll get a bailout (Score:3, Insightful)
So.... You've only ever eaten food grown within your county, and the laptop you're using right now uses chips made in the chip fab at the end of your street. Right?
Re:Of course they'll get a bailout (Score:4, Informative)
You comparisons are so pointless that I'm attributing your post as Chewbacca defense.
My comparisons didn't need to be related at all, except for the most obvious point that you still did not get. Just because you don't see a need or justification in a product or service, doesn't mean it's automatically pointless and worthless for the rest of society.
Just because most people haven't traveled by plane, doesn't mean it's a pointless and worthless service for the rest of the planet that relies on it.
And ironically enough, most people that have never flown are simply too stupid to realize just how much they still rely on the airline industry. Should have been pretty damn obvious to the I-need-it-NOW Prime generation when Amazon started their own fucking airline.
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Re: SUCK A FAT ONE, MS. MASH! (Score:4, Interesting)
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No, no, no!
Let's use the Internet to exploit inefficiencies in the existing market and cause DISRUPTION!
I, for one, will only use the Playnr and Phlyr apps to find gig worker pilots looking to flightshare as soon as I figure out which one caters to the flatulent.
Re: Of course they'll get a bailout (Score:4, Insightful)
Head down to your local small general aviation airport. You can only pay for gas but you're bound to find someone willing to fly you where you want to go in a Cessna. People are always looking for opportunities to increase their hours.
americans will have to learn how to pronounce .. (Score:5, Insightful)
the S-word. yes, socialism.
bailing out X or Y or Z is socialism, 100%. its when some of everyone's money gets used for the general common good. in this case, keeping an important industry alive.
but you know - keeping HUMAN BEINGS alive is just as important. we have more poor and lower middle class than those who are stable and well-off. so many are going to be near bankruptcy.
we need to stop the left-vs-right crap and realize that we're all in this together and the rich are just going to HAVE to give up their billions in order to save the world.
all that money won't do you any good if everyone is sick, dying, unable to work and unable to do things FOR YOU. yes, for you, you rich fuck. time to give back you selfish bastard.
give until it hurts.
Re:americans will have to learn how to pronounce . (Score:5, Insightful)
Let the airlines go bankrupt. Let their planes get sold at auction when this clears and new airlines are formed. We likely won't be worse off for it. As should have happened to the banks in 2008.
Comment removed (Score:5, Interesting)
Re:americans will have to learn how to pronounce . (Score:4, Insightful)
Here's what also happens:
- Employee pension funds, often tied up in the carrier's stock
- Further crash the price of oil contracts, and the Saudis win
- Boeing and a domino-effect of suppliers and contractors die
- Travel becomes constrained, especially in rail-poor USA
- Contractors, the little ones like Uber drivers and airport workers get laid off
- Hotels, conference centers, and more, expire in the domino effect
- Areas that thrive on tourism shrivel
And while I have zero love of the customer service of air carriers, bankruptcy will also stanch their tax obligations and therefore needed funds that are otherwise being given away in support of survival.
Bottom line: yeah, we'll be much worse off
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Air uber starts up.
jalopy service from 99 /pp
Add an Parachute from $200 per pp per flight
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Airlines aren't special. All of the economy is hurting and going to hurt more. Support the people through tough times and we'll bounce back just fine.
All those terrible things the parent mentioned? we should not have to care. Give people a lifeline, not corps. Corps are a gamble, whether they are private or traded publicly. Weren't ready for the disaster? tough. Invested in the gamble? tough. Loaned to the corp? that was a gamble too, so tough. There's no reason the people at large should be on the
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You speak of the CapEx, not the OpEx. Much will be curtailed. It would only slowly re-build. You over-estimate capital resources to swoop in and buy dead carriers. Margins were thin to begin with, and carrier failures have been fairly common among the low price (and therefore low-margin) carriers.
It takes real cash flow to run an airline, get any kind of customer loyalty (fuck you, United Airlines), re-capture scarce airport slots, and do this for a decade.
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Margins were thin to begin with
Don't know about any of the non-us carriers but margins were not so thin as to prevent them from doing significant share buy backs for nearly a decade strait.
Sorry I am firmly in the F-them camp right now. They played silly games to hike their share price so their execs could get rich exercising stock options and the hedge fund types could enjoy the run up and then dump the shares on the retail and institutional funds world (held in everyones 401ks) on days like today; while the market heads generally down
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No love lost between them and me. Customer service and respect spiraled to a new MBA-favored bottom. Nonetheless, the strength of the US economy in a recovery will be measured by its supply chain strength, and airlines are a frighteninglly important component of that supply chain power, be the transported object human, or merchandise.
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It costs them $3 to $5 (USD) maximum to produce a barrel of oil!
https://www.aljazeera.com/ajim... [aljazeera.com]
In contrast, Canada (Alberta) has a production cost of around $10 to $15 a barrel and it's higher in Alberta oil sands and higher in United States as well:
https://open.alberta.ca/datase... [alberta.ca]
So, I guess the Saudis can maintain the low prices of $10 to $25 a barrel and keep their economy growing pretty well.
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And in the mean time air travel collapses, causing significant economic dislocation. Letting things crash because of your peculiar market-based religion is more a signal of how detached you are from the real world.
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And why should air travel be happening right now?
Re: americans will have to learn how to pronounce (Score:2)
This is why bankrupt airlines should be nationalized, their investors wiped out, and the companies slowly dismantled and sold off in a way that doesn't hinder normal operation of the air travel system.
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Letting things crash because of your peculiar market-based religion is more a signal of how detached you are from the real world.
Or he simply remembers 2008 when we bailed out everyone; the US government by extension you and I got debts heaped upon us and industry got to keep all the rewards from their general irresponsible practices. Yes the government mostly got repaid for TARP money lent out except not really we got paid back for loans at interest rates that did not reflect the risk we took and probably do not really cover in inflation when consider at the same time central banks expanded the money supply. Ultimate you and I got
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Let the airlines go bankrupt. Let their planes get sold at auction when this clears and new airlines are formed. We likely won't be worse off for it. As should have happened to the banks in 2008.
Perhaps that would work for airlines, but banks? Greed by any other name, is still a fucking souless asshole.
Here are our bailout terms (Score:5, Interesting)
He says, sure we taxpayers can help. But times are tough for us too. You airlines benefited from big corporate tax cuts two years ago. Did you save any of that? And business the past decade has been good, lots of profits. Did you save any of that? Oh, you used it to buy back your stock. American Airlines, for example, bought $15 billion of its stock over the past six years. If you airlines had kept that cash, you might not need a bailout.
Here are our (taxpayer) terms for your bailout. Not grants, not forgiveness of taxes. Strictly a loan. "A senior, secured credit line that will allow you to borrow the money you need to operate and pay your taxes while you figure out how to survive."
"This credit line will pay interest at a rate that compensates taxpayers for the use of our money and the risks we are taking. The use of this credit line will also require you to issue equity to taxpayers to allow us to share in your recoveries, if any. Yes, this equity issuance will dilute your shareholders and cause your stock prices to drop. But not as much as they will if you go bust."
"Our credit line, moreover, will be senior to all of your other debt and secured by your airplanes and other assets. If, despite our help, you fail, we will sell your airplanes and recoup 100 cents on our dollars before any of your other lenders get a penny."
If you think you can get better terms from another investor, go right ahead. Thank you for your request.
Re: Here are our bailout terms (Score:2)
Regarding too big to fail bail outs, in the banking crash of 2008, the Dutch post bank got money from the state, and they actually paid it back in full. The CEO now got a top job here in Switzerland, and that piece of news got some raised eyebrows.
Re:americans will have to learn how to pronounce . (Score:5, Insightful)
No, it's only socialism when you are giving tax money to people. Giving tax money to corporations is as American as can be.
Re:americans will have to learn how to pronounce . (Score:5, Informative)
No, neither is socialism. From wikipedia:
Socialism is a political, social and economic philosophy encompassing a range of economic and social systems characterised by social ownership of the means of production and workers self-management of enterprises. It includes the political theories and movements associated with such systems. Social ownership can be public, collective, cooperative or of equity. While no single definition encapsulates many types of socialism, social ownership is the one common element.
It is not socialism unless there is some form of social ownership. Just giving money to people or even providing free health care is not socialism unless the ownership is "social".
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There will always be rich and poor. Batista left Cuba with $50M, Castro had $500M by the time he died. Communism isn't going to help, capitalism is the only system that has proven to get people out of poverty.
Bailing out is unnecessary, why should we bail them out? They're capitalist that have made billions over the last decade, if they had any sense, they would've re-invested in their companies instead of living on the edge and requiring a bailout whenever their customer pool tanks. Air travel is necessary
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capitalism is the only system that has proven to get people out of poverty.
You have an example for that? Historical time, period, country?
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Most of the things that are colloquially called socialism are something else entirely. This is one of those things.
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Credits, leases and monthly wages have to be paid whether the airlines make revenue flights or not.
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Airplanes are stupid expensive. In order to justify their existence they need to basically be performing their function at 100% utilization.
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Those same air planes could become super cheap in bankruptcy auctions. Stop acting like its every creditor has some god given right to repaid even when the make bad loads. Loaning money to airlines who had no cash on the balance sheet to cover operations over a short term revenue lapse, while at the same time were using every red cent they got hold of to do share buy backs was bad lending. Fuck them.
Re:americans will have to learn how to pronounce . (Score:4, Interesting)
Meh. Some government loans to prop up the airlines until the crisis abates are all that is needed. Actually, the government doesn't even need to loan the money, just commit to back the loans and let the banks take care of it. With government backing, a near-zero Fed rate and the relaxed limitations on banking reserve requirements, banks will have no risk, and almost no cost of lending (they can create the money they lend out of thin air), so they can lend the airlines all the cash that's required on very favorable terms.
But, actually, if the bank bailout is any example, the taxpayers may be better off if the government loans the money directly. The government turned a profit on the bank bailout.
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Except we do leave people to die in the streets. I'm in favor of loans to help ALL businesses weather this storm. Giving money to anyone to save them is just not something I'd support.
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Most libertarians and capitalists understand and accept the concept of an emergency.
Not Ron Paul, the most libertarian sociopath of them all. He thinks you should be free to die in the street if something happens to you that you're not prepared for.
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Americans are quite good at socialism. A particular generation of them went through some weird shit in the middle of last century and are triggered by it though.
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Surprised that you [TheGratefulNet] aren't attracting more troll mods. I'm guessing that 30% Insightful, 30% Overrated, and 20% Interesting is rounding error for 3, 3, and 1 votes, respectively. Wait a minute! That also doesn't make any sense... The percentages don't come anywhere close to 100%? WTF time?
Anyway, I think your comment would have been stronger if you had considered the question of healthcare as a social benefit or opportunity for profit. Yeah, it's important to seek efficiency and to try to av
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We could experiment if we were more willing to let insurance companies go bankrupt when they insure the wrong things, eh? However we don't need the clear line to know that good health is too expensive to insure. ... every 5 - 10 yea
In Germany many insurances, notable health insurance, are "at cost".
E.g. my house and stuff inside the house insurance was a one time payment of $1 for every $1000 of worth. E.g. your property is $200,000, you pay $200.
The money is put into an saving account of the bank/insurance
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You can't just try to see the world in black and white...there are lots of shades of grey in there.
When talking airline bailout, it is really more of a LOAN they will have to pay back to the govt, much like the bailouts in the past.
A great deal of western economy depends on the airlines....so, it likely would be
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bailing out X or Y or Z is socialism, 100%. i
I disagree strongly. Socialism is more about government control of business than who gets the profits. As the 737 Max shows, there's little enough government control.
Bailouts are the chief failure mode of capitalism. Regulatory capture is a serious problem, to be sure, but bailouts are where the system has become fully corrupt.
the rich are just going to HAVE to give up their billions in order to save the world.
The rich don't have enough billions to matter much, and stockholders are mostly the elderly. Not that that's any excuse to bail out failing corporations, mind you, but we really n
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TheGratefulNet simply has one thing: envy of the successful'
Ironically for you, without all of the government emergency interventions and bailouts that will without a doubt be doled out over the next few months, most of the "successful" in this country would get totally wiped out in the ensuing complete economic meltdown.
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I don't hate them. I'm just pointing out that without the upcoming "communist" actions, you're not going to be one of them much longer. (Although I could be wrong; you seem you might be enough of an outlier to have actually buried a bunch of physical gold somewhere.)
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Well, TheGratefulNet obviously does. And if you're not sharing either of ours' sentiment, then WTF are you doing in this thread?
I've never been one of them, but I do intend to resist any Communist actions with everything I've got.
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I've never been one of them, but I do intend to resist any Communist actions with everything I've got.
Then I assume you'll be tearing up your $1000 check Trump is mailing out next week?
Bus with wings (Score:2)
Maybe people will now make their trips and enjoy the places they travel through. Maybe people will finally relax and have some manners with the people they travel with.
What am I thinking, none of that will happen. They will prop up the bus's with wings and not let them go under.
It's their own fault (Score:5, Insightful)
They have spent the last few years using almost all free cash buying up their own shares, instead of building up reserves.
Re:It's their own fault (Score:5, Interesting)
As has almost every public company.
Force them to sell new shares to raise money. No bailouts for any company that borrowed money to buyback shares.
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It's not just airlines. Most companies and individuals operate with as small margins as possible to maximize profits. People buy as big houses and apartments as their *cashflows* can afford. They borrow as much as they can and assume their future income can pay for the interest. It works great and maximizes profits/pleasure as long as the cash keeps flowing but it is very sensitive to disruptions.
Why? (Score:5, Insightful)
This won't destroy the aircraft or eliminate people licensed to fly aircraft or that are accustomed to customer service for passengers. Airlines going bankrupt will mean reorganization or liquidation, and those planes will end up with other business entities that end up having to hire pilots, cabin crew, ground crew, and all of the other people required to run airlnes.
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This won't destroy the aircraft or eliminate people licensed to fly aircraft or that are accustomed to customer service for passengers. Airlines going bankrupt will mean reorganization or liquidation, and those planes will end up with other business entities that end up having to hire pilots, cabin crew, ground crew, and all of the other people required to run airlnes.
Yep, the airlines that survive will take up the excess routes, but up what planes they want, and hire more crews, and raise their ticket prices since there will be less competition.
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Don't know that is true. I don't see any reason only existing airlines can get in the game. If all of a sudden a lot of normally very expensive aircraft enter the market place at fire sales prices; others can enter the market. In fact other airlines will have been hurting as well and likely don't have the capital or credit to do those acquisitions.
On the other hand you have companies like Amazon or Apple for example that have tons of cash and could easily decide a dirt cheap buy-in to the airline biz is
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Don't know that is true. I don't see any reason only existing airlines can get in the game. If all of a sudden a lot of normally very expensive aircraft enter the market place at fire sales prices; others can enter the market. In fact other airlines will have been hurting as well and likely don't have the capital or credit to do those acquisitions.
On the other hand you have companies like Amazon or Apple for example that have tons of cash and could easily decide a dirt cheap buy-in to the airline biz is a better use of it than sitting in the at banks generating 0-interest.
Seen a lot of new airlines starting up lately? They are expensive (from both a cap-ex and op-ex perspective), have thin margins, and are buried in red tape. Even Elon Musk would probably call you crazy for wanting to start on.
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Takes more than just cheap planes to make an airline. You need ground crew. A source of maintenance (either your own or contracted out, and contracted MRO gets expensive). A way to train your pilots; if you don't have your own simulator rental time runs anywhere from $500-1k+ per hour. And it can cost even more if you don't have your own training curriculum, but to write your own you need FAA approval. In fact you need FAA approval for a lot of things. There's a lot of regulatory and compliance checki
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Then regulate *that* part, or provide an advantage for smaller / newer airlines to acquire those planes and staff, rather than bailing out the old failing ones?
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It already has sped up retirement of aircraft so it does destroy them. Also pilots will lose their ratings if they don't fly whatever they are rated for for a while.
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It already has sped up retirement of aircraft so it does destroy them. Also pilots will lose their ratings if they don't fly whatever they are rated for for a while.
Pilots don't lose their ratings(at least, not by not flying). But legally, the longer they go without flying the more training they require before they can legally fly again. It's really technically about takeoffs and landings-a pilot could fly but not be at the controls for enough takeoffs and landings to keep their qualification. There's also roughly semi-yearly training they must complete to stay qualified as well.
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Pilots don't lose their ratings(at least, not by not flying).
Yes they do.
But legally, the longer they go without flying the more training they require before they can legally fly again.
That is what is meant with: "to lose ones rating".
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Pilots don't lose their ratings(at least, not by not flying).
Yes they do.
But legally, the longer they go without flying the more training they require before they can legally fly again.
That is what is meant with: "to lose ones rating".
That's not losing their rating, that's losing their qualification. There's a big difference. Their type rating doesn't go away, and any type of training they do to recover that qualification does not convey a type rating unless they are training on a new air craft (and thereby getting a type rating for that aircraft).
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Unfortunately most people in this topic have no clue about the flight "business".
No one is simply crafting a new airline from ground up ... much to complicated. Where is the "base airport"? Which slots for connections to "buy". The whole crew needs a rating for the crafts in question. I don't know what current standard is 20, years ago, you could have max. two ratings (for two different plane types).
If many air lines go bankrupted, this will be a majour economic disaster.
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The whole crew needs a rating for the crafts in question. I don't know what current standard is 20, years ago, you could have max. two ratings (for two different plane types).
You can have plenty of type ratings, but you can only be current and qualified on 2 aircraft types at once.
Re:Why? (Score:5, Informative)
The airlines for the most part are logistics companies [wikipedia.org]. They coordinate the transfer of cash from passengers to employees, airports, fuel and food services, aircraft lease companies, and aircraft manufacturers. And coordinate all these companies and people flying people from one destination to another. In a logistics operation, you make money by fine-tuning the movement of these cash, employees, services, and passengers so that everything arrives just in time (mostly) to satisfy everyone.
In other words, the value of an airline is in those schedules, organization, and coordination. The closer you cut the arrival times of passengers, planes, employees, and services (while accommodating the occasional tardiness), the more efficiently it runs, and the more money you make. The planes, the facilities, and the employees. The value in an airline comes from how those tools are used - schedules, organization, and coordination.
Basically, everything runs smoother (you make more money / lose less money) when things go according to plan. And right now things are very much not going to plan. A big disruption like they're experiencing now upsets all the finely-tuned schedules and coordination, resulting in massive financial losses. A bankruptcy results in even bigger losses - in addition to disrupting scheduling and coordination, you're also disrupting organization, ownership, employment, and payment schedules.
When the future is uncertain, it's better to let failing businesses die. But when you know a disruption like this is temporary, it's usually cheaper to bail the business out to preserve the existing organization. The bailout ends up costing less than dissolving the airlines and going through the additional expense of redistributing and reorganizing it. Same reason we bailed out GM (because we know the recession from the housing bubble collapse was temporary, and the auto industry wasn't the cause of the recession). BTW, it doesn't need to be a cash handout. You can make it an emergency loan to sustain them, which they can then repay over several years once business recovers.
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That's OK. The fleets are all old, and there's loads of 737 MAX planes waiting to be sold. If their buyers go bankrupt, they're going to be for sale again quite quickly.
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That's OK. The fleets are all old, and there's loads of 737 MAX planes waiting to be sold...
Speaking of old reliable fleets, there's a valid reason loads of 737 MAX planes are sitting on the ground.
Guess we should ALL be thankful you're not some billionaire who's thinking about buying an airline...
I'm not MBA, but... (Score:5, Insightful)
Isn't it wise to have 6 months expenses saved up in case of emergency?
I mean, that's what the government tells us lowly individuals in case our income goes away. Stands to reason business should operate in a similar manner.
They spent a lot of years working and making money, did they look ahead and save up? I don't think I should have to pay for their lack of financial planning. /sarcasm
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This is going to hit a lot of European low cost airlines which are smaller and depend on the holiday/tourism traffic to survive. These airlines already get support from larger partner airlines or operate with very thin profit margins that, if this slowdown lasts into the summer months (which it most likely will) they will have a hard time recovering.
As for the US, some of the smaller commuter airlines will struggle, as will some of the larger legacy carriers. Southwest was already in a crunch with the who
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I've heard rumors of possibly shutting down some airports such as SEA, LAX, or O'Hare. If west coast airports do shut down that could hurt airline such as Hawaiian or Alaskan. The major US airlines will feel some pain, but should weather this.
That's very optimistic for a country that's still in steady log growth with no signs of flattening out, 100 -> 1000 cases and 500 -> 5000 cases both took ~9 days. Sure the curve has broken a few places but there's neither a China-style lock down or South Korea-style disinfection efforts happening in the US, just a mad dash for toilet paper so people drive around to ten stores to check for stock. And I don't actually mean that to bash the US in particular, Italy, Iran, Spain, Germany, France, Switzerla
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Isn't it wise to have 6 months expenses saved up in case of emergency?
if a public company tries to do that, then a private equity firm will buy them, take the cash, and sell them six months later. Having too much money on your books is bait for sharks.
More common for businesses is to make sure you have a line of credit. Boeing just borrowed $12billion from a line of credit they had agreed to before the crisis, for example.
The problem is that a lot of these airlines are already deeply in debt. Delta, for example, probably can't handle much more losses. Bankruptcy still se
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More common for businesses is to make sure you have a line of credit. Boeing just borrowed $12billion from a line of credit they had agreed to before the crisis, for example.
They also had to rush and draw from that line a lot quicker than they wanted to in case those lines of credit were shut down, which I believe happened in the last bailout.
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Just more socialist business practices! :) (Score:2)
Privatise the profits, but nationalise the loses!
Maybe just let them go bankrupt?
Or do the GM - “Government Motors” - thing and buy them for pennies on the dollar to sell later at a profit? It did work well with GM. Maybe because there are multiple airline have NY, Texas/Georgia, Washington and CA each buy an airline?
Or do like they did with AIG? Give them the money they need, but get equity (shares) for what they put in?
Free tickets (Score:4, Insightful)
At a minimum, if airlines get a bailout, I think taxpayers should get fully transferable/negotiable vouchers for free tickets, in proportion to total federal income tax paid in 2019.
It would also be nice if the govt extracts concessions in exchange for the bailout:
1). Minimum seat pitch.
2). Requirement to seat families together at no extra charge, if the seats are there.
3). No carry on bag fees.
4). One free checked bag up to 50 lbs.
5). Required seat selection @ ticketing.
Not really (Score:2)
Let them burn (Score:2)
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have something else replace them. Like, what, exactly?
I'll take it a step further. Since the parent was bitching about seating space, exactly how is that problem going to change? Like they're going to build all new planes? Yeah right. Besides, even if they did have the capital to pull that off (they don't), what modern design are they gonna go with? The grounded 737-MAX? It's like piling crap on top of shit when it comes to problems in commercial aviation.
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have something else replace them. Like, what, exactly?
A company that looks at airline business from a service perspective, with the business goal of providing service instead of maximizing of repurchasing shares. Existing airlines are fixated on competing based on price and delivering most bonus-enchanting buy-backs. They corroded everything they touched - once prestigious job of pilot is now undesirable. Once pleasant flying is now hard to tolerate. It doesn't have to be this awful to be profitable enterprise.
They deserve to go bankrupt and we, the taxpayers
Amtrak! (Score:2)
“Too big to fail”? (Score:4, Insightful)
Comment removed (Score:5, Insightful)
No bailouts (Score:3)
Airlines spent $39 Billon on stock buybacks (Score:5, Insightful)
If they want to raise money let them sell back some of the $39B in stock they bought.
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What are their capital outflows (Score:2)
Sure there are debt repayments, if they had debts, but the average maturities within 6 months aren't gonna bankrupt a company, not by a long shot.
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If their workers are temp laid off, factories closed, jets grounded, why are they going to go bankrupt? Just limit the capital outflows, and wait.
A lot of aircraft aren't bought outright. They are leased, or at the very least have payments that need to be paid. Those payments don't stop if the planes aren't flying. There's also costs for facilities (headquarters, hangars, etc). And believe it or not, you have to find a place to park all those aircraft. You can literally have thousands of commercial aircraft in the air at one time on a typical day, besides the ones on the ground. There's literally not enough airports gates to handle every aircra
Re: (Score:2)
Many small businesses will fail too (Score:5, Insightful)
I'm not sure I'm on board with the argument that ALL airlines are a vital industry.
I think what is far more vital are all the small businesses -- 23 million sole proprietorships out of 30 million small businesses -- that really can't afford to just take a few months off from doing business. Hair salons, local restaurants, small stores, daycare, your doctor's office, plumbers, electricians, you name it, basically anything that's not a chain in your local town.
If they implement more restrictions about going out, many of these businesses simply won't make it. An entire town's worth of business could be wiped out because everybody is practicing (good!) social distancing and staying at home.
Small business is just as vital to the vitality and growth of the American economy. Without them, the economy will be in for a long period of recession.
So by all means, throw more money at large corporations who should be required to have their own insurance fund for emergencies like this. But you also better have a plan on how to help the millions of ordinary Americans who are either employed by or rely on a small business in their community. Because if you don't, you'll be seen as just helping another corrupt industry relying on government handouts in order to make their business plan work.
Stop moving around empty planes. (Score:2)
Yes I know it is more complicated than that (especially since everything is leased: the plane, the hangers, the airport itself, the land), but if you can't afford to park your fleet for 1 month, then you were already in trouble.
Just great (Score:3)
Most Airlines Could Be Bankrupt By May. Governments Will Have To Help.
Now taxpayers get to pay a baggage fee -- and after the major US carriers spent profits on stock buybacks rather than saving for emergencies or improving customer service. For example, from Don’t Feel Sorry for the Airlines [nytimes.com] (and others):
In 2014, having reduced competition through mergers and raised billions of dollars in new baggage-fee revenue, American began reaching stunning levels of financial success. In 2015, it posted a $7.6 billion profit — compared, for example, to profits of about $500 million in 2007 and less than $250 million in 2006. It would continue to earn billions in profit annually for the rest of the decade. “I don’t think we’re ever going to lose money again,” the company’s chief executive, Doug Parker, said in 2017.
There are plenty of things American could have done with all that money. It could have stored up its cash reserves for a future crisis, knowing that airlines regularly cycle through booms and busts. It might have tried to decisively settle its continuing contract disputes with pilots, flight attendants and mechanics. It might have invested heavily in better service quality to try to repair its longstanding reputation as the worst of the major carriers.
Instead, American blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves. At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats.
At no time during its years of plenty did American improve how it treats its customers. Change fees went up to $200 for domestic flights and to $750 for international. Its widely despised baggage fees were hiked to $30 and $40 for first and second bags. These higher fees yielded billions of dollars, yet did not help the airline improve its on-time arrivals, reduce tarmac delays or prevent involuntary bumping.
Most PEOPLE may be bankrupt by May! (Score:4, Insightful)
Yea, people worry about the airlines, and this company, or that company, but the stark reality is that if people don't go out, stop shopping, stop all purchases, then ALL small businesses will be bankrupt by may. Take the following article:
https://www.marketwatch.com/story/small-businesses-could-crumble-in-45-days-or-less-as-coronavirus-pandemic-takes-a-toll-2020-03-16?mod=home-page
We have maybe 45 days, really 35 at this point, before small businesses start to really fail in volume. The place I am working will be done in another 2-3 weeks due to there being the expense of lease price plus other bills, and income being at under 10% of normal due to a lack of customers. How many others will just fold, rather than trying to just keep going as long as possible, knowing that things are only going to get worse in the next two months?
So, if my employer goes under, and the next business, and the next business, what will happen to those employees? Unemployment doesn't pay nearly enough when there will be ZERO interviews or new hires for the next six months? Who cares about airlines, I am more worried about 90 percent of the businesses out there closing up shop.