5 ms·
I think Matt Levine has pointed out before that the amount of money it would take to keep US airlines going was likely to be more than their pre-Covid market ca
by makomk 7y ago
I think Matt Levine has pointed out before that the amount of money it would take to keep US airlines going was likely to be more than their pre-Covid market cap. It's a big reason why the idea that they should just have saved up enough money to not need bailouts instead of paying out to shareholders is a non-starter; the value of the airlines to shareholders is less than the amount it would cost, because air travel is so cheap and low margin. In some very real sense, the profits from not saving up have already been socialized - everyone who travels by air or buys goods shipped that way has benefited from it - and so there's no alternative to socializing the losses too if we want airlines to exist after this.
- chosenbreed37 7y agoSocializing the losses...I like that turn of phrase :-)
- joshuaissac 7y agoThat phrase (the full form of which is "privatising the profits and socialising the losses") is often used in criticisms of bailouts of failing companies. This practice even has a name: lemon socialism.[1] 1. https://en.wikipedia.org/wiki/Lemon_socialism https://en.wikipedia.org/wiki/Lemon_socialism
- netcan 7y agoGot a link to Levine's post?
- makomk 7y agohttps://www.bloomberg.com/opinion/articles/2020-03-17/the-good-times-for-airlines-are-over https://www.bloomberg.com/opinion/articles/2020-03-17/the-go...