5 ms·

Bailouts for government-mandated shutdowns in crises are different than saving the banks for screwing up while trying to make more money.

mvid 7y ago
People were flying less and cancelling flights far before the govt mandated lockdowns
- nickff 7y ago
  But it was exogenous to the airlines, unlike the financial crisis, which was caused by malinvestment (by the banks themselves,) among other things.
  - mnm1 7y ago
    The airline companies are the major spreaders of c19. While unintentional, this is a fact as is their ability to have put in some safeguards to slow down prevention like forcing sick people to wear masks and gloves (and ideally to fly on separate planes when possible) and disinfecting their planes after each flight. In this case, they directly caused a huge part of this crisis, much more so than in 2008. Also, airlines that have done stock buybacks should never be bailed out. They knowingly put themselves into a poor situation that should bankrupt them. In all of these cases, the airlines themselves are culpable and don't deserve any bailouts.
    - dageshi 7y ago
      Well when you put it like that, WE that is to say the public are really directly responsible for the spread of the virus, by travelling when sick. People are not responsible, the government who could've mandated such measures aren't responsible but the airlines are?
      - mnm1 7y ago
        The government is definitely responsible. They fucked up testing. They fucked up contact tracing. They fucked up stocking for supplies. They fucked up handling travelers and quarantining them. They are still lying to people about the effectiveness of masks. They called it a hoax and pretended it wasn't happening. In fact, I can't think of a single thing the US government didn't fuck up. Most other governments were not much better. But I understand you want to blame the people, most of whom were asymptomatic, for spreading a disease they didn't know about that, at least in the US, was called a hoax, that the Chinese arrested people for talking about. Yes, it's their fault not the fault of the government that is supposed to prepare and handle such issues. Absurd. And yes, the airlines played their part in it too, not disinfecting, not requiring masks, not caring a single bit about the safety of their passengers. Now they want a bailout because they couldn't manage their cash properly and decided to increase their stock price with stock buybacks instead of saving cash for a rainy day like this one. Absurd.
  - mrgordon 7y ago
    The airlines also invested poorly this time around though. They spent all their money on dividends and buybacks instead of saving for a downtown. American Airlines, which was the worst balance sheet, famously declared they were doing so well that the airline industry wouldn’t hit a catastrophe again! “American Airlines has been rather irresponsible with its capital allocation in recent years. As shown in the tables above, it spent the highest proportion of its operating cash flow (52%) on dividends and buybacks, despite also spending more on capex than any of its peers.” “American paid for most of this capex by issuing debt and entering sale-leaseback transactions. Meanwhile, it returned a little more than half of its operating cash flow to shareholders over this period, mainly through buybacks.” https://www.fool.com/investing/2020/03/25/american-airlines-waste-cash-flow-share-buybacks.aspx https://www.fool.com/investing/2020/03/25/american-airlines-... This article tries to make the point that not all airlines were equally bad but let’s face it American was the first one to need a bailout and they definitely squandered their financial position.
    - erjiang 7y ago
      Let's say that AA didn't do any buybacks - instead they saved up all of the money that they would have spent on buy backs in the last few years. Would that have been enough to survive this pandemic?
      - mrgordon 7y ago
        Yes, likely. In 2015 and 2016 alone they paid $8.346 billion in buybacks and they seem to pay roughly a $0.40 dividend every year. Either way it would have allowed them to borrow less money at much better terms. Instead they are totally insolvent immediately and people have a more negative view of bailing them out because they appear irresponsible.
  - zeckalpha 7y ago
    Airlines could have limited the spread.
the8472 7y ago
Cheap air travel facilitated the global spread of the virus, they're not exactly innocent bystanders.
- oh_sigh 7y ago
  Cheap car travel facilitated the global spread of the virus. They're not exactly innocent bystanders. Globalization facilitated the global spread of the virus, anyone with an international supply chain is not exactly innocent bystanders. Social activity facilitated the global spread of the virus. Meetup.com is not exactly an innocent bystander. etc...
  - Klinky 7y ago
    All true statements. The same criticisms can be applied to any businesses within these industries initially looking to be given billions in monetary grants without equity in return.
  - the8472 7y ago
    Not sure what you're trying to say here. The point is that airlines were directly profiting by staying operational while the virus was already spreading. Had they been more proactive in curbing international travel then they would also have been able to resume business sooner. Cars are not commercial entities that profit from spreading the virus. Rideshare and taxi services would be a different story, but even then they do so in a much more localized manner. Similarly if meetup didn't shut down its services soon enough the yes it did facilitate the spread for profit. Economic globalization (movement of goods) on the other hand can work without moving people around as much.
- thewebcount 7y ago
  Small, dense living quarters facilitated it too!
  - bilbo0s 7y ago
    Living quarters facilitate local spread. Trains and cars facilitate national spread. Planes and ships facilitate global spread. Each of these has adjutant consequences of increasing severity. With planes and ships imparting the most severe consequences. Difference between planes and ships being that ships have medical staff, and you can quarantine them in port if necessary. Which we did mostly. (Of course, we probably should have done the same with airliners but hindsight is always 20/20).

mvid 7y ago

People were flying less and cancelling flights far before the govt mandated lockdowns

nickff 7y ago
But it was exogenous to the airlines, unlike the financial crisis, which was caused by malinvestment (by the banks themselves,) among other things.
- mnm1 7y ago
  The airline companies are the major spreaders of c19. While unintentional, this is a fact as is their ability to have put in some safeguards to slow down prevention like forcing sick people to wear masks and gloves (and ideally to fly on separate planes when possible) and disinfecting their planes after each flight. In this case, they directly caused a huge part of this crisis, much more so than in 2008. Also, airlines that have done stock buybacks should never be bailed out. They knowingly put themselves into a poor situation that should bankrupt them. In all of these cases, the airlines themselves are culpable and don't deserve any bailouts.
  - dageshi 7y ago
    Well when you put it like that, WE that is to say the public are really directly responsible for the spread of the virus, by travelling when sick. People are not responsible, the government who could've mandated such measures aren't responsible but the airlines are?
    - mnm1 7y ago
      The government is definitely responsible. They fucked up testing. They fucked up contact tracing. They fucked up stocking for supplies. They fucked up handling travelers and quarantining them. They are still lying to people about the effectiveness of masks. They called it a hoax and pretended it wasn't happening. In fact, I can't think of a single thing the US government didn't fuck up. Most other governments were not much better. But I understand you want to blame the people, most of whom were asymptomatic, for spreading a disease they didn't know about that, at least in the US, was called a hoax, that the Chinese arrested people for talking about. Yes, it's their fault not the fault of the government that is supposed to prepare and handle such issues. Absurd. And yes, the airlines played their part in it too, not disinfecting, not requiring masks, not caring a single bit about the safety of their passengers. Now they want a bailout because they couldn't manage their cash properly and decided to increase their stock price with stock buybacks instead of saving cash for a rainy day like this one. Absurd.
- mrgordon 7y ago
  The airlines also invested poorly this time around though. They spent all their money on dividends and buybacks instead of saving for a downtown. American Airlines, which was the worst balance sheet, famously declared they were doing so well that the airline industry wouldn’t hit a catastrophe again! “American Airlines has been rather irresponsible with its capital allocation in recent years. As shown in the tables above, it spent the highest proportion of its operating cash flow (52%) on dividends and buybacks, despite also spending more on capex than any of its peers.” “American paid for most of this capex by issuing debt and entering sale-leaseback transactions. Meanwhile, it returned a little more than half of its operating cash flow to shareholders over this period, mainly through buybacks.” https://www.fool.com/investing/2020/03/25/american-airlines-waste-cash-flow-share-buybacks.aspx https://www.fool.com/investing/2020/03/25/american-airlines-... This article tries to make the point that not all airlines were equally bad but let’s face it American was the first one to need a bailout and they definitely squandered their financial position.
  - erjiang 7y ago
    Let's say that AA didn't do any buybacks - instead they saved up all of the money that they would have spent on buy backs in the last few years. Would that have been enough to survive this pandemic?
    - mrgordon 7y ago
      Yes, likely. In 2015 and 2016 alone they paid $8.346 billion in buybacks and they seem to pay roughly a $0.40 dividend every year. Either way it would have allowed them to borrow less money at much better terms. Instead they are totally insolvent immediately and people have a more negative view of bailing them out because they appear irresponsible.
- zeckalpha 7y ago
  Airlines could have limited the spread.

the8472 7y ago

Cheap air travel facilitated the global spread of the virus, they're not exactly innocent bystanders.

oh_sigh 7y ago
Cheap car travel facilitated the global spread of the virus. They're not exactly innocent bystanders. Globalization facilitated the global spread of the virus, anyone with an international supply chain is not exactly innocent bystanders. Social activity facilitated the global spread of the virus. Meetup.com is not exactly an innocent bystander. etc...
- Klinky 7y ago
  All true statements. The same criticisms can be applied to any businesses within these industries initially looking to be given billions in monetary grants without equity in return.
- the8472 7y ago
  Not sure what you're trying to say here. The point is that airlines were directly profiting by staying operational while the virus was already spreading. Had they been more proactive in curbing international travel then they would also have been able to resume business sooner. Cars are not commercial entities that profit from spreading the virus. Rideshare and taxi services would be a different story, but even then they do so in a much more localized manner. Similarly if meetup didn't shut down its services soon enough the yes it did facilitate the spread for profit. Economic globalization (movement of goods) on the other hand can work without moving people around as much.
thewebcount 7y ago
Small, dense living quarters facilitated it too!
- bilbo0s 7y ago
  Living quarters facilitate local spread. Trains and cars facilitate national spread. Planes and ships facilitate global spread. Each of these has adjutant consequences of increasing severity. With planes and ships imparting the most severe consequences. Difference between planes and ships being that ships have medical staff, and you can quarantine them in port if necessary. Which we did mostly. (Of course, we probably should have done the same with airliners but hindsight is always 20/20).