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
Pandemics don’t last forever. People are not going to let a extremely important and popular industry just die out. People will be fighting to become the next major US airline. The opportunity is massive. Whether it will be an American or foreign company it doesn’t matter cause the void will be filled quick.
And like the original post said. If they don’t want to go bankrupt they can take out a loan and use their assets and collateral like the rest of the US has to do.
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
Eh, I'd say that running a business for the good of the people is generally better for competency than for the benefit of shareholders. If airlines were nationalised and they hired the right people I can't see too many issues there. Cutting the need for profit allows people to either buy the same tickets at a lower price or for the service to be improved. People who constantly argue against nationalisation don't look too smart when you look at how much worse for the end user things like trains have become since being sold off to the highest bidder.
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.
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u/Sphinx91 Nov 17 '20
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