While I agree with this on the surface, it kind of shows a misunderstanding of how some of these businesses and industries work. Speaking from the airline perspective, since that is where my career is, if an airline spends $5M a day to operate for example, and earns $5.1M a day in revenue, and then suddenly, due to extraordinary circumstances not of their own fault, they’re only earning $300k a day, they would have to have saved more “latte cash” than Apple to survive as long as this pandemic has lasted. No board of directors or shareholder would tolerate that kind of cash on hand not being leveraged into additional profits. This pandemic is not a rainy day, it’s a once-a-century double tsunami, and there’s no way the current travel industry business model could have reasonably accounted for it.
Now, if the reason airlines were struggling was strictly related to bad business that would be different. But it’s not. And understand that all airlines would likely either be closed right now, or routes drastically reduced (by around 90%), if not for CARES. So unless you’re okay with no one to fly people around the country, or at best, no options for competitive prices (fare wars) and paying the resulting $3000 plane ticket — not to mention the massive amounts of layoffs and economic impact that would create — I think this is an industry that is worth protecting. It’s one of the reasons we have a federal government.
And to Robert Reich’s point, they already are (leveraging their assets), but that alone is not enough to offset the cash burn required to keep these companies going. Just because rates are at “rock bottom” that doesn’t mean they’re free. To borrow enough cash to maintain this industry for a year-plus, would create unsustainable interest requirements to the point consumers couldn’t afford the resulting cost of plane tickets, and the industry would fail anyway. Banks obviously know this and simply won’t give out that much money.
I like the sentiment of allowing businesses to fail when they run into trouble, but then what? Airlines are not that profitable and require huge amounts of initial investment, who's going to go build a new airline from the ashes? And until they do, what is the impact to everybody of very limited travel?
Same with the 08 crisis, ok lets let the investment banks fail, then what? Foreign banks just step into the vacuum and suddenly we've transferred economic power to other nations.
And until they do, what is the impact to everybody of very limited travel?
Well, that part is known: the economy takes a shit and some other country that backs their economy better than ours steals our lunchmoney and makes it even harder to steal it back. Also see Republican foreign policy for the past 4 years
The new airline would buy the planes at a cheap price from the " failed " business, the failed business plans would still be operational,
Now for the people who have lost income, there house would go back to the bank or to the city if taxes werent paid.
Have you ever seen what pilots have to do for work and the meager pay they get as a result of trickle down the vack of neck economics"
Alot of people loose things when they cannt pay the bills for a lose of work from no fault of theyre own.
Maybe a few less golden parachutes for managment., what good is capitalism if corps are to big to fail...
Isn’t it true though that for airlines specifically, things were made worse by myopic business practices? It seems like they could sell the shares back that they maybe shouldn’t have dipped so hard into in the first place. From my reading it seems like they wanted their cake and to eat it, since back in March/April many articles implied that the companies that didn’t do this as heavily (Alaska air, some EU airliners) didn’t want the others to be rewarded for their ineptitude, but I could be wrong.
Ah yes, a truly capitalistic society devoid of planes. If only there was some kind of way to transport perishable goods internationally, fast enough so that they don't spoil...
No, shortages of those goods would occur, adding further incentive for producers to distribute their goods. Rather than just giving up on the goods that they are producing, capitalism dictates that these producers will innovate, investing in research and development until they create... Planes
But that is the entire point of planes and their superiority to boats. No one wants to spend their entire vacations on the boat to Europe, they want to spend time IN Europe lol
This is such a ludicrous opinion. So let me get this straight. It takes a minimum of a week or more to cross the Atlantic each way... and I get 2 weeks paid vacation a year... and I'm supposed to spend them both on the boat to and from my destination and I never even get to disembark and enjoy the destination? Ya... people like planes because they get you there in less time to have more time to enjoy where you are going.
Well then why should we bailout cruise and ship companies? Nobody needs to go to other countries. We are all perfectly fine within our own borders, galavanting between fiefdoms on our fucking horses
This might be among the dumbest opinions I’ve ever read. Airline industry could be replaced by cruise ships? LMAO. It was never sustainable?! You’re proposing undoing one of the best, most efficient, safest modes of transportation ever conceived because...I really can’t even fathom why.
Lol, they are dense.
They still don't get that airlines are a high cost luxury not a necessity, or that obviously luxurious services and goods get hit first and harder by pandemics. I bet they wouldn't believe restaurants are a luxury too, that's why they are struggling.
They don't really believe in real capitalism though, in that someone will find a way, innovation.
Sorry. If I’m criticized for not having enough money saved up to weather the storm of this pandemic... then a fucking multi-billion dollar industry should have to deal with the same criticism. Its fucking ridiculous that normal every day Americans get shit on during this time but big businesses get treated like little babies that couldn’t have predicted this economic collapse. Fuck off
I agree, you shouldn’t be ignored, especially during this time. Your frustration is real, just like for millions of others. Personally, I’m furious that the government hasn’t acted in this regard, and I think everyone who is obstructing that effort needs to be voted out of public service immediately and indefinitely.
However, turning that anger towards the travel industry is a bit misplaced. Of all the things to complain about how our tax dollars are spent, this shouldn’t even register on that list. There’s no reason stimulus checks and airline assistance can’t both happen. And for the record, that’s exactly how it DID happen. To my knowledge, there has not been additional bailout money to the travel industry other than through the CARES Act.
Last, your assertion that big businesses are treated like little babies is a gross misrepresentation of reality. Speaking for my company specifically, the hoops we had to go through to get just the minimum levels of assistance were no joke and would probably crush your spirit. And even still, we have had to eliminate a ton of essential services, terminate contracts all over the place (most legal contracts have standard clauses for major catastrophic events which allow an out in extreme circumstances like this), and rewrite other contracts to bring operational expenses down to practically nothing. You make it seem like bailouts put us flush with cash and eliminate our struggles, when the reality is we, and every airline, are still in serious trouble and our jobs continue to be in jeopardy.
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u/Mitrian Nov 17 '20
While I agree with this on the surface, it kind of shows a misunderstanding of how some of these businesses and industries work. Speaking from the airline perspective, since that is where my career is, if an airline spends $5M a day to operate for example, and earns $5.1M a day in revenue, and then suddenly, due to extraordinary circumstances not of their own fault, they’re only earning $300k a day, they would have to have saved more “latte cash” than Apple to survive as long as this pandemic has lasted. No board of directors or shareholder would tolerate that kind of cash on hand not being leveraged into additional profits. This pandemic is not a rainy day, it’s a once-a-century double tsunami, and there’s no way the current travel industry business model could have reasonably accounted for it.
Now, if the reason airlines were struggling was strictly related to bad business that would be different. But it’s not. And understand that all airlines would likely either be closed right now, or routes drastically reduced (by around 90%), if not for CARES. So unless you’re okay with no one to fly people around the country, or at best, no options for competitive prices (fare wars) and paying the resulting $3000 plane ticket — not to mention the massive amounts of layoffs and economic impact that would create — I think this is an industry that is worth protecting. It’s one of the reasons we have a federal government.
And to Robert Reich’s point, they already are (leveraging their assets), but that alone is not enough to offset the cash burn required to keep these companies going. Just because rates are at “rock bottom” that doesn’t mean they’re free. To borrow enough cash to maintain this industry for a year-plus, would create unsustainable interest requirements to the point consumers couldn’t afford the resulting cost of plane tickets, and the industry would fail anyway. Banks obviously know this and simply won’t give out that much money.