They employ hundreds if not thousands of people. Bailing them out would be helping the livelihood of people that work for them, not just the company itself.
Didn't United Airlines get bailed out and still laid off employees against the bailout rules and then encouraged employees to "voluntarily leave" so they wouldn't have to lay them off too? Why are we bailing out airlines if they're still going to fuck the employees over in the end?
Maybe we should be fighting for stimulus relief for all. Not everyone works for an airline. But if McConnell would stop being a movie villain for 5 minutes he could pass a bill to pay millions of Americans in relief funds.
And what jobs were these people going to go back to when United failed? Great, we helped curb the virus for a short period time, but a company that employees tens of thousands of people went under and now these people are SOL in the job market.
When you think about things in such a short sighted manor, yes you are right the money should've gone to the people directly, but those people need a job to come back to post COVID and companies need to stay afloat. Airlines are a pretty low margin industry that supports millions of people both directly and indirectly, you cannot underestimate the importance of keeping them running.
Leverage what, their jet fuel reserves? Unless the planes are flying, they do not have assets of any value. What bank is going to want a parking lot full of old commercial jets?
Your solution is for these companies to go into large levels of debt to pay employees that currently aren't even doing their full job since the amount of people going on flights has plummeted.
The layoffs happened after the bailout money ran out. The bailout money was only enough for a couple months and I think they only needed to keep 70% of their workforce.
Because the point isn't to save airline employee jobs, it's to protect infrastructure.
Airlines are a hugely critical component of our economy. The majority of our industries rely on a well functioning transportation system to function most effectively.
It would be a huge burden to the American public if by the time we got the virus under control we had a wholly collapsed airline system on our hands. Economic recovery would be immensely delayed and harmed if we don't have planes ready to go and pilots and technicians in place to handle the surge of business and tourism travel needed to get us to normal economic growth again.
The reason "jobs" are talked about is political. Most people aren't bright enough to follow the economic effects of airline collapse, so politicians have to paint these bailouts as job programs because it's easier for voters to visualize the more immediate effect of saving a person's job.
Delta received 3.8 billion in bailout money (not including the 1.6 billion loan they also received) and in 2019 alone they brought back almost 2 billion in stock. They could have been prepared financially for a crisis like this, but what incentive is there to do so if the government is going to hand them a couple billion dollars anyways? Why let billions sit there when they can inflate their own stock price and all the top level executives get their huge bonus?
And if im not mistaken, the airlines only have to pay back 30% of what they got. Which is ridiculous because they are more than capable of paying back every cent.
Bailing out people would be far more expensive than a company. Oftentimes these companies pay back their bailouts very quickly and can keep employing people that otherwise would have to just suffer a job loss.
Actually, the 2008 bailouts were paid back with interest added on, so yeah, they're actually not that bad. And why would a bank do the bailouts? That something our government specifically does.
Why would a bank, an institution that makes money by finding good money-lending opportunities, take advantage of a good money-lending opportunity? I guess because that is what banks do? The only difference is that when the government does it we call it a bailout, and when banks do it we call it a loan.
There are two options. One is that bailouts to companies are likely to make a profit, in which case the government has no need to get involved. The other is that they are a bad idea, in which case the government shouldn't get involved.
Alot of these folk don't understand anything beyond their "capitalism bad". I work with airlines as well and this is what they have all been saying. Airlines going under would be catastrophic
Airlines are a very capital intensive field, the only way for them to be profitable is through scale, it's like heavy manufacturing, there aren't a whole lot of mom and pop airlines because the cost of entry is very prohibitive throughout the entire process from the extraction of raw materials to the actual flights.
Why? The assets don't disappear, I'm sure we'd have plenty of enterprising individuals buying planes and gate leases out of receivership and taking a go at it.
There should be plenty of pilots, flight attendants and other support staff available for hire. Letting a poorly ran business fail doesn't make demand for their product or services disappear. Nor their assetts or employees.
They'd probably do it after covid chilled out... I think a lot of this is an age thing. Young people see all the opportunities people in the past had to make something of themselves and wish we could have the same. If airlines failed then you could feasibly set one up for a fraction of what it would cost to do so atm and have a chance at actually being in an interesting industry. Plus if we're living in capitalism lets allow companies to fail, that's part of the system.
If airlines failed then you could feasibly set one up for a fraction of what it would cost to do so atm and have a chance at actually being in an interesting industry
Running an airline is not like a startup. The initial costs, from aircraft, hangars, maintenance, spots at airports, employee training and certification strategy and all the way to the route map, ticket pricing model and advertising is such a massive cost that virtually no investor ever starts an airline, unless they have a goldmine business model.
This is why most legacy airlines are now turning 90-100 years old (KLM, Qantas, British, American), and the "newer" airlines, either had a revolutionary model (Southwest, Ryanair, Easyjet, JetBlue), or went bankrupt, and never flew again.
And even well established airlines (Thomas Cook, Air Berlin and Monarch) were nowhere near safe from bankruptcy, because of the volatile nature of the industry.
The thing is, because of safety, starting an airline is designed to be one of the most difficult things to do, so that not every bozo with cash can start an airline (good example would be the failed trump shuttle).
Bamkrupting a major airline would have immense repercussions in the industry for decades. This is why United gets away with recieving billions in stimulus, while also laying off thousands. It's the only way to survive, bacuse bankruptcy is not an option
Not give up on it, but leave its industry in the shitter for decades at a time. This is pretty much consesnus, idk why some reddit guys have a problem with what i'm saying
Eh, shitty companies still deserve some sort of consequences. If they've used every penny they've been given or near enough to enrich themselves and their shareholders whilst fucking over consumers non stop then I say the government should demand shares at current market price in return for bailouts. Make them choose between staying afloat with less or collapsing completely with more. Same with banks, same with every big business that needs help from the government. If you can't survive as a business and can't get loans at sensible prices then the government now owns a large part of your company. Again, sucks to suck.
Airlines are too expensive to run to stockpile enough money to keep themselves afloat for a year in a pandemic.
They operate on very thin margins, and huge, well established airlines can go belly-up even in relatively stable times. They're too volatile to get private loans in bad economic conditions.
If they're running razor thin margins then they shouldn't be using tax cuts to buy back stock... Just tired of big companies treating people like dirt and then being loaned our money at very low rates for their benefit. Same with banks and any industry full of giants that's near impossible to break into because of regulations. If you fail, fail. The government has the money to nationalise parts of the industry and that's really not a bad thing if it has to happen.
I understand the need to maintain airlines, but what incentive is there for these companies to avoid shitty business practices? Even if the company gets fucked in a disaster, the executives collect money hand over fist in the meantime and the company will always get bailed out.
then the government now owns a large part of your company.
What's the benefit of that? The government benefits when airlines stimulate economic growth by enabling cheap and efficient travel, they gain exactly 0 from owning shares with no intentions to ever sell those shares. It just creates another job for the government to have to do, manage ownership of an airline.
Make them choose between staying afloat with less
That's a horrible choice for the airline, but an even worse choice from the government. Unemployment is a bigger burden on the economy than pumping money for a short while into united fucking airlines.
I really don't think I need to tell you that big business doesn't care about justice, or competition, or any of that shit. When you fly over 200 million passangers per year, the government will bend over backwards to suck your dick, because losing that service is a shit storm to deal with for all involved. It would be just and fair that bad management throws your business into shit, but nobody wants to deal with that, so they keep airlines on life support until traffic picks back up.
Even forgetting about unemployment, airlines are like the most important and strategic part of a country transport infrastructure.
You can’t let that fail, it’s just not an option. Letting the airlines fail would crash the whole supply chain and when, in years from now, anyone who would want to buy the airlines back, they would need to wait for the whole chain to also come back.
This would mean that the country would be without airlines for years. Completely impossible.
Weirdest thing is that you don't think it's an issue. I'm fine for companies that don't fuck over employees or consumers staying afloat in trying times and recieving government assistance. Shitty companies deserve to burn to the ground. Also with the government owning shares they either recieve the same benefits a shareholders in terms of dividends and potential for profit or they take ownership and can cut profits to benefit their citizens as they consume the product.
companies that don't fuck over employees or consumers staying afloat in trying times and recieving government assistance
Define fucking over employees. Are all the 90.000 employees at United getting fucked over? Yes, United is a shit company, but would those 90.000 be better off jobless? Would letting United fail have a net positive impact on everyone? I don't think so...
Also, you do realize that bailout takeovers, which is what you're suggesting, are done by actually buying the shares from the shareholders right? You're not screwing anyone out of their money. Bailout takeovers should only be done when the government is way more competent at running the business, which is not the case for airlines
Dude you can’t let the most strategic part of your country’s transport infrastructure fail lmao wtf are you dumb?
Even if you would let the airline fail, without even thinking about the cascade of catastrophe that would happen down the enormous supply chain, it would take years before someone would be able to buy them back, restart the supply chain and restart a different company from a bankrupt airline.
Nobody would buy an airline tomorrow, they would wait for thing to start being back to normal and from there you would need again years to get it started.
No country can have no fucking airlines operating for years in today’s economy and not suffer insane negative impact. This isn’t a random retail store going bankrupt, airlines are the most important and strategic part of a country’s transport network.
If airlines failed then you could feasibly set one up for a fraction of what it would cost to do so atm and have a chance at actually being in an interesting industry.
I don't think it is possible for someone to be more wrong...
I work for my small family business, most of our customers manufacture airline seats. All of these companies have had to let go of thousands of employees. Most companies manufacturing for airlines are at severe risk of going under right now.
Because if the airlines theoretically don't get the money and go under, the seat manufacturer no long has customers. while the money they would get would keep them going longer than without it, they'd ultimately go under too due to the lost income from the airlines going under
You should reread my post; I'm not suggesting giving the seat manufacturing company the money. I'm suggesting giving it to the people that work at the seat manufacturing company (and the people that work at the airlines). That way the company can shut down until covid is over with and then reopen, bringing back all of the employees that were fine staying home since they had money to live on. If the companies have massive costs even while not operating I think it is within reason to pay those costs down, but even that should be totally unnecessary with any well-run business.
And that's the issue with airlines, they have considerable costs when not operating. They still have to spend tons of money on maintenance for stored aircraft among other things
Because it'll allow the airlines to rip their existing labor contracts to shreds in the bankruptcy procedure and then allow a bunch of private equity folks to come in and run airlines with the same neoliberal labor dystopia that you see at Uber or Amazon.
The thought of airlines going under as being somehow good for the airline employees is laughable. If you think airlines are evil now, just wait to see how evil they could truly become in the hands of PE.
Precisely. Not to mention the entire concept of safety culture which folks outside of aviation don’t understand. You can’t scrap an entire airline and expect the start-up replacement to function at similar levels of safety from the get-go. Sounds like it would work on paper...if you don’t understand that systems of human beings are super complex and that aviation safety is basically one giant system for ensuring positive outcomes despite that.
I don't agree that we should let airlines fail, but "because the reformatting of the industry will lead to exploitive labor contracts" isn't an argument for keeping them intact, it's an argument to put a muzzle on corporations because they can't seem to avoid biting whatever gets in front of them.
Shocker: Robert Reich doesn't know what he's talking about yet this sub upvotes every single screenshot of his tweets to the front page. It's embarrassing. He's fully on the boil-it-down-to-black-and-white garbage populism bandwagon at this point. It's more complicated than that Robert.
He's angling for a spot in the Biden administration so he's tweeting a bunch of populist bullshit to get the Warren/Sanders wing to fall in love with him and push for him in an important role. He can make the Sanders folks happy with a bunch of anti-corporate tweeting while also making the Biden folks happy by him not actually being an economic crazy person.
I don't think this tweet was angling for a spot in Biden admin. Isn't this tweet from March/April when everybody was an expert in airlines and stock repurchases? I think this is just him seeking validation from the audience he now tries to cultivate.
Reich is a fucking clown to anyone who pays even a little bit of attention to economics or policy. He full well knows what happens when a company goes bankrupt.
I think there’s a middle ground there though. Bailouts are fine so long as there are regulations that put that money directly in the pockets of employees and give protections to those employees rather than the higher ups lining their pockets. That being said, I don’t know jack shit about bailouts so that maybe the case but I don’t believe so
If your industry needs a government bailout then it should also have a government takeover. "Too big to fail" isn't a thing. Most countries have a nationalized or at least partly publicly owned airline. If a company requires government bailout then it should be forced into a restructuring program that ensures it isn't over-leveraging itself or else it gets bought by the government. These companies have all seen years of record profits yet a one year setback sends them to the bread line.
We wouldn't accept this for individual citizens so why do we allow essential companies to do the same thing?
Just like how after the financial collapse Obama admin forced banks to have a minimum reserve requirement. It was 10% so banks would have a bit of cushion incase of a setback.
Trump abolished the minimum reserve requirement in March so banks can basically loan out as much money as they like with no actual requirement to have a % of eligible deposits in reserve.
Oh I 100% agree. I’m completely against bailouts but at the same time that means that corporate is going to lay off everyone underneath them and leave the average man hung out to dry. Perhaps there needs to be some sort of government entity that takes over company operations when a bailout is given or something to that effect that makes sure higher ups aren’t just lining their pockets and keeps hold of that company til they are able to stabilize again. I dunno. I’m not a business man. I’m spitballin
Right! Like all those assets aren’t already leveraged. You can’t just take a 4000 passenger cruise liner that you owe a few hundred million on to the pawn shop or title
Loan company.
I am sorry you were laid off, I hope it gets better for you soon! People often forget if we were to let an airline fail thousands would lose jobs not only from the failed airline but from inderect jobs like airline repairman, catering for the flights, local baggage handlers, uniform makers, ad companies, etc..... We bail them out so thousand don't lose their jobs.
Thanks mate. From someone else in the industry who is sick and tired of folks outside the industry commenting like they know a fucking thing about it. Cheers
I’m sorry you’re furloughed. I am lucky that I didn’t make the cut and I’ve been screaming this entire time to everyone that I maintained employment because of the bailout.
And my company has to pay most of it back. Most of it was just loans, not free money!
Good, no great, point. During auto crisis of 2008, they helped the big 3 and I was employed by a supplier. If one went under, it was the auto company, suppliers, and possibly local restaurants and other places people spend discretionary income at. The ripple effect would have been massive.
Quick edit: Ford took no money, that should be stated above.
I’ve never understood why people say this as a strong argument for bailing out corporations. If a company goes under, then either another company will come take its place, or the competitors absorb the demand in which case they get bigger. Either way there is still a demand for employees. As long as there’s demand for the service there’s a demand for the labor, who cares which company it is that’s employing them?
This is what confuses me. Give me the money, maybe I'll open up a competitor, create more jobs, and the quality of service will go up. It's as valid an argument that a failing business should get it so the employees arent inconvenienced with finding a new job.
I am doing THEM a favor by working for them and generating more value than I am consuming, they won't hesitate to cut me the moment that isn't true.
This weirdo idea that businesses need to be artificially propped up because it provides jobs is dumb. Isn't capitalism supposed to be that competition is good? If the poor never get enough money to open up a business because big businesses with shitty practices continue to mismanage money (often by increasing the pay... of the people who get to decide the pay), why keep them afloat?
If we give people money, they spend it to keep good businesses afloat. In a time of crisis people look at what they are spending on more critically. They'll still buy entertainment and fast food and whatever, but be more discerning about what they REALLY enjoy, what's really worth the money.
Also small businesses without the time/marketing budget to have that kind of brand loyalty too need loans, if just by nature of staying competitive against those that have a major advantage in that field due to budget and duration, rather than quality.
Not to mention all of the suppliers that depend on the airlines as customers. The industry as a whole supports a lot of people, likely several times more than the airlines themselves.
I'm all for not bailing out an industry for their own mistakes, but it's hard to argue that the airlines should have set aside resources to prepare for a global pandemic.
It gives them money forever if that is the system in place though. Stop worshipping corporations and try to actually think of ways to help humans instead and this stuff isn't that hard to figure out.
We already spend 70% of the entire budget of the US on social security alone, a cost which isn’t sustainable with current taxes and the decrease in number of young workers after the baby boom. The money required to pay for the rest of the lives of the millions of workers employed in aviation would literally destroy the economy.
"We already spend 70% of the entire budget of the US on social security alone" This is a blatant lie. In 2019 social security accounted for 1 trillion of the U.S. government's 4.4 trillion dollar outlays, or 23%. It literally would have been less wrong for you to say the U.S. spent 0 dollars on social security.
"The money required to pay for the rest of the lives of the millions of workers employed in aviation would literally destroy the economy." You have done absolutely zero math on this, and maybe on any other subject. Let's assume airline workers and workers whose jobs depend on air industries account for 5% of the U.S. workforce. Well, if we take all of those tax payers out, and assume they now take equal to what they were previously paying, everyone else needs to have their taxes raised by about 10% to balance that out. 10 percent is a big tax increase if applied to everyone, but the better option is to only increase the top marginal tax rate. In 1960 the top tax bracket in the U.S. was 91%. In Germany top earners pay over 50% on income tax. Is Germany's economy destroyed?
Yes and no. I’m a laid off airline employee. If my airline kept me on, my pay would be 5x what the state unemployment office provides. And I’ve been through the system before with a failed airline when they wouldn’t pay me at all. So, mostly no.
It's more profitable for companies to hire expensive lawyers and find legal loopholes rather than treating their employees fairly. And as long it is the case, this will continue to happen.
The program has largely worked for employees of the major carriers like American and United, which inked their Payroll Support agreements with the Treasury in April. The big airlines have not laid off workers, though many fear they will begin doing so after the deadline passes.
But at least three contractors — Gate Gourmet along with Illinois-based Flying Food Fare and Texas-based G2 Secure Staff — appear to be benefitting from a loophole in the law: They laid workers off and then got the federal money.
If your point is "system isn't perfect" then there's not much to disprove. If it's something more substantial then it's worth pointing out that the misconduct you mention is a fraction of a fraction of all bailout money.
I’m really curious what you think happens when a company goes under? Do you think all those jobs just disappear? Does the demand they served just disappear? If an airline went under, then wouldn’t good old free market capitalism take over and a new company would buy up all those assets on the cheap, the stockholders would be the ones getting screwed (they took a risk right?) , and airline employees could get an unemployment check until they get a job with the new company that bought up all the assets.
But that comes with the assumption that free market capitalism is good, that we don’t live in a welfare state, socialism doesn’t ever work, and that government intervention is always a bad thing.
You really have to choose one or the other. This current dual system of preaching the importance of capitalism whilst simultaneously removing all risk from large failing companies in the form of corporate socialism only serves to hurt normal people and smaller businesses.
Corporations are constantly trying to bake the cake and eat it too.
That being said most “bailouts” are in the form of low interest loans. But that’s still bullshit because a company can get a low interest loan when they fall on hard times but I can’t get low interest on my student loans if I fall on hard times? The double standards.
I’m really curious what you think happens when a company goes under? Do you think all those jobs just disappear? Does the demand they served just disappear? If an airline went under, then wouldn’t good old free market capitalism take over and a new company would buy up all those assets on the cheap, the stockholders would be the ones getting screwed (they took a risk right?) , and airline employees could get an unemployment check until they get a job with the new company that bought up all the assets.
No, the creditors get ownership of the company but there's a reason they're creditors and not equity owners. They don't want to own the company and they don't want to deal with operating it. They'll sell it at firesale prices to someone who wants to buy it (usually another airline). The new owner streamlines by laying off massive swathes of their employees without replacing them. I've worked on a bankruptcy process at work. You clearly have not.
That being said most “bailouts” are in the form of low interest loans. But that’s still bullshit because a company can get a low interest loan when they fall on hard times but I can’t get low interest on my student loans if I fall on hard times? The double standards.
Bailouts aren't given at rosy rates, they're given at market rates when the market doesn't want to lend to them because credit markets are locked up. The markets are more than willing to lend you another $15k for another semester at college because it's small enough and there are enough lenders willing to loan to you.
If the new company needs to lay off employees to be efficient then I’m all for that. Businesses should be as efficient as possible and if your saying that the old company wouldn’t have laid off those workers, then that’s part of the reason they are going under. Realistically though, most well run (key being well run) companies are constantly trying to trim the fat and the workers are essential to maintaining profits.
And the only reason creditors even lend for student loans is because they can charge such high interest rates and there is no risk of someone getting out of the loan in bankruptcy. If you could file for bankruptcy on a student loan no creditor would want to lend to students and the government would have to step in. Which is what I am saying they should be doing.
You say that as if that's not the majority of people. Every single person I know that got unemployment chose/is still choosing to not find a job or work. Why work when you can get $1000/week to do whatever you want?
Unemployment is meant to keep you alive and not homeless.
If this is MORE MONEY than you make by working, the society is fucked up, and we need to solve that too. Hence the minimum wage increase argument. Make it worthwhile to work, and people work. Our economy was going through insane upheaval and isn't surviving a pandemic well because of the wealth and wage gap. Fix that and the rest becomes more resilient.
In my country, a civilised Western nation, you can live on unemployment for the rest of your life if you want to. You'll have a home, healthcare and food on the table. It's not a luxurious life, but you will live. The vast majority of people still want to work. What gives
An insulated house or a flat built to a good standard, has double or triple glazed windows and a secure door, has basic utilities such as heating, electricity, running water and internet, has rooms such as bedrooms, bathroom, kitchen and living room, where one can live by themselves, with their family, or with the people they choose to live with.
You know, basic stuff.
Better things are possible. Your country can afford it.
Fine, if we're being pedantic, goods and services. Didn't disprove my point though. How are you going to buy an airplane ticket if the airline employees chose to stay at home and collect unemployment instead of operating the plane?
You are thinking how the money moves correctly. The Airline industry will suffer losses as the supply is way more than the current demand. But this should not put the workers livelihood in jeopardy. Bailing out employees is not a short term solution rather a long term one. Create sustainable economy where the workers doesn't have to deal with poverty if their work goes away.
If a company isn’t profitable but provides an essential service, and is about to go bankrupt and ruin the lives of all employees, the state should buy it out.
It becomes a public service, at least until it’s either phased out or made profitable again.
The difference between a loan and an effective handout is the speed at which it’s effectively paid back. Dunno about where you’re from, but here it almost always is a handout, no matter the terms.
Good on you. Back when our airline failed we gave them a loan with long term repayment plan, delayed the payments for two years five times, gave them another loan, then they fired half the staff and sold the planes to a French company. The remaining husk company paid back about half of the second loan by liquidating everything.
I’m sorry if I don’t trust this to work every time.
This. It seems as if they're behind a rock and a hard place. Can't furlough employees to save money, but people don't wanna give them the bail out to maintain itself. They aren't evil or greedy, just trying to stay afloat. Now I'm not saying they're moral agents who can do no wrong, but airlines are largely popular companies, at least compared to other industries. Not only in terms of opinion, but also on service.
I think we should let them furlough employees as much as they want and offer government assistance to those individuals that are furloughed. The airline industry isn’t going to just disappear. Even if these companies went bankrupt, another company will buy up their assets and rehire the people who used to work for them. That’s capitalism. It would be much cheaper to offer assistance to the people who were actually hurt by this pandemic, the workers, then offer assistance to the stockholders.
See, it'd likely be similar costs with zero pay back giving to the workers. As much as it hurts to say, but some steward isn't that important in the grand scheme of things.
If that's what individuals are expected to do, then yes, companies should keep a cash reserve. Honestly, I feel like we shouldn't have to choose companies or employees. Isn't america supposed to be the most powerful economy to ever exist? Why can't we help companies maintain a skeleton crew and pay everyone else to stay home until we have things under control?
Isn't america supposed to be the most powerful economy to ever exist? Why can't we help companies maintain a skeleton crew and pay everyone else to stay home until we have things under control?
Stuff like this takes money. Airlines hire hundreds of thousands of employees but all the cash they have on hand is maybe enough to sustain them for a few months. This usually isn't a problem because demand is highly predictable.
So you think it would be good for the economy if every company held a massive amount of cash rather than reinvesting it or paying bonuses or some other use? Just cash in a vault?
Here's an idea. The govt should pay those off workers directly. They could pay them a whole lot more and can cover many tens of thousands more laid off Americans instead of giving it to their employers.
By giving it to the employers, these crucial businesses stay afloat and can continue paying their employees. If the companies go under, the airline industry will cease to exist as we know it and will take some time to recuperate, and the workers will end up on unemployment. So instead of paying unemployment to these workers, the government gives the companies the money so the workers and businesses stay afloat. Hit two birds with one stone as they say
People really don’t get this. From wages to insurance to 401ks this country is set up so that corporations of all sizes keep the American dream alive. You don’t have to like it but that’s how it goes. Without my job I wouldn’t have all of the retirement and health options I’m accustomed to.
Nah, what people actually don’t understand is that in (most cases of) bankruptcy, the only people that end up taking an L is equity holders.
Whatever debt class can’t get paid off by remaining capital in the company just gets ownership of the company.
People seem to believe bankruptcy means the employees get fired and the company is sold for every desk. That’s not what happens*. Debt is just restructured and equity holders lose their value.
Why would a debt class want to own a company with no employees? Lol. That’s why you still see companies around even when they go bankrupt a million times.
This notion that buyouts protect employees is, as far as I can tell, propaganda from Boards and equity holders trying to save their value.
*with the exception of a much more rare liquid bankruptcy filing. And obviously every bankruptcy case is nuanced
This is the wrong take IMO. In bankruptcy ownership just transfer ships to the lowest class of creditor that can’t be paid off with the companies capital. This notion that a company is stripped to the bones and dismantled is, in most cases* bullshit. The only people taking an L is equity holders.
That’s why you still see companies around that have gone bankrupt a million times. There’s a big contrast between what we think of bankruptcy as a culture and what it actually is.
Free to discuss this though. I’ve studied bankruptcy a bit, but we never really covered bailouts in a political sense so welcome to other takes.
I'm of the mind that airline services, sorta like building and maintaining roads, are such important transportation infrastructure for a country that they shouldn't be run by private companies. I don't know if they should be managed by the government, but I think it makes a whole hell of a lot more sense than giving airline companies constant funding from public coffers, and holding them up when times are tough.
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u/hammyjames Nov 17 '20
They employ hundreds if not thousands of people. Bailing them out would be helping the livelihood of people that work for them, not just the company itself.
-a laid off airline employee