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So it would be logical if shareholders re-capitalize airlines now. Or let them fall if shareholders see no point in keeping airlines alive.
by chewz 7y ago
So it would be logical if shareholders re-capitalize airlines now. Or let them fall if shareholders see no point in keeping airlines alive.
- duaoebg 7y agoThat would involve selling shares at a low price after buying them at a high price. This would make management look stupid.
- swarnie_ 7y agoMaybe management is stupid?
- zentiggr 7y agoHmmmm.. isn't the market about finding truth and moving accordingly?
- gwd 7y agoTo ideological purists. To most people it's about making money.
- notyourday 7y ago> That would involve selling shares at a low price after buying them at a high price. This would make management look stupid. It is difficult for management not to look stupid if it is stupid. Airlines were doing well because everything was doing well, not because airlines management was non-stupid. Not having a car accident on an open road with no other cars in a perfect weather does not make one a good driver. It just makes one not a bad driver.
- stingraycharles 7y agoThat’s how they transfer value to their investors. It costs money, but so do dividends.
- ardy42 7y ago> That would involve selling shares at a low price after buying them at a high price. This would make management look stupid. They should be made to look stupid, since using "96% of free cash flow" to buy back shares means they left the companies that they manage grievously vulnerable to disruption. They should pay for privatizing their gains and trying to collectivize their losses.
- atlasunshrugged 7y agoWhy would the shareholders do that if they think the government may step in and bail them out?
- tomp 7y agothat's why the government should never bail out shareholders. Bail out the company, sure - if the company is vital for "the system" (which airlines are, long-term) - but only after bankruptcy, i.e. wiping out the shareholders.
- beefield 7y agoPreferably also some debt holders should be wiped out. Otherwise it becomes too cheap to leverage your company if you need to pay only risk-free rate on your debt.
- boh 7y agoThere's a whole society that exists outside of these shareholders and they need airlines to travel.
- chewz 7y agoThere is valid business opportunity then.
- boh 7y agoFor what? Making other airlines after the existing ones fail?
- chewz 7y agoOr re-capitalizing existing ones. Honestly I would not worry about airlines, restaurants and other non-essential business at the moment. They will be all right eventually, when demand for their services comes back. If not, someone else will step in. I would rather be giving unlimited tax money to Roche for increasing capacity in producing as many tests as necessary and more, to LVHM for converting their Chanel No 5 production lines into producing hand-sanitizer, to Roll-Royce for producing ventilators and to other front-line business,
- boh 7y agoLumping airlines and restaurants in the same category might make sense for the efficient market section of an economics textbook, but food trucks aren't "stepping in" for "front-line" businesses. For the past century being "alright eventually" has always demanded government support. Though businesses have never actually corrected any economic crisis in history, maybe this time they will? I guess blind faith has its benefits, but it's not a particularly strong strategy.
- ardy42 7y ago> There's a whole society that exists outside of these shareholders and they need airlines to travel. Then wipe out the shareholders and let the companies reorganize under new ownership.