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The most convincing argument I've heard is centered around just how much cash flow and expenses goes through the airlines on a daily basis, meaning they'd need
by johnbrodie 7y ago
The most convincing argument I've heard is centered around just how much cash flow and expenses goes through the airlines on a daily basis, meaning they'd need some extraordinary amount of cash in the bank to weather something unprecedented like this. If they _did_ have that much cash, it'd be bad for the economy since that capital is effectively "locked up". Instead, give the proceeds back to the shareholders that will likely do something else with it - invest in new businesses, buy more goods and services, etc. I don't have any links handy, but Ross Perot railed against companies hoarding cash for decades.
- blackguardx 7y agoCash in a bank isn't "locked up." The bank uses it to make loans. In a sense, it expands the supply of money because a bank isn't required to have 100% cash reserves. So $50 billion in bank accounts generates more than $50 billion in loans.
- dlp211 7y agoHolding cash does not lock it up. Banks make deposited funds available as capital for investment. This can lead to a liquidity problem during a crunch, but that's literally why we have a central bank. There are plenty of companies that have large cash reserves. Stock buybacks should be made illegal again except as market operations to provide compensation. You can return to shareholders through dividends.