airlines bailout - 2020 [a3dfe340]

Tags: articles, finance

• www.instapaper.com/read/1296234054
• Airlines spent 96% of free cash flow on stock buybacks

• Airline bailout is not strict

  • For instance, some of the money is in cheap loans, and some in grants that will be forgiven if the carriers fly right

• No minders

  • But in a less capital-serving bailout, another problem is who the minders would be. Remember AIG? The government appointed three trustees. There’s no evidence they did anything other than collect fees and confer a veneer of legitimacy.

• Bailout doesn't even work for all airlines, such as budget tourist ones like JetBlue

  • Very likely more bailouts are needed

www.nakedcapitalism.com/2020/12/congress-to-pass-17-billion-bailout-of-airlines-to-top-off-prior-bailout.html

• followup bailout of 17 million with second stimulus package

1. Nov 13, 2022

• www.mercatus.org/publications/spending-deficits-debt/2020-bailouts-left-airlines-economy-and-federal-budget-worse

• What happened with this bailout?

  • was the airlines bailout actually worth it?
  • doesn't really seem like it, the airlines avoided bankruptcy

2. Airline Unprofitabiltiy

• davidoks.blog/p/why-airlines-are-always-going-bankrupt

  • readwise.io/reader/shared/01kqx6jt5mjex44at54q42ew37
  • Issues with the airlines themselves being structurally uncompetitive since they have really high fixed costs, since labor contracts are negotiated ahead of time, that airplanes are high fixed costs, and that you hedge jet fuel. So high fixed cost industry means that competition ruins it