Airline bailout

The problems that the airlines are having relates to their lack of caution and foresight. Stock buybacks are great as long as you have the cash--unless there's a recession, in which case you're short of cash due to decreased business, and you find that if you sell back that stock, you take a loss.

So should we spend taxpayer dollars to save them from their mistakes?

My solution is that the government buys all that extra common stock. The airlines can have the option to buy it back after X period of time. This way, it's not a giveaway--essentially, it's a loan, with collateral.

That, the public might find palatable. A direct goody giveaway, not so much.

Unfortunately, it will have to be done. I just don't think now is the time.  According to the government report, this may last 18 months. It doesn't seem sensible to keep the airlines fully staffed and ready to go when we don't know how long they will have to be idled. It seems to me they just need to have their assets protected sort of like a bank would protect a home that was about to be foreclosed.

I don't like the idea of a loan with no strings. I think taxpayers should get a substantial ownership and voting interest in companies they bailout to ensure that they are running in the interest of their investors, the taxpayers. 

In a related matter, Boeing is such a cluster fuck. Existing upper management should be fired if the taxpayers are asked to stick a cent into that shithole company. 

Actually the airlines were in much better shape going into this crisis than previous ones.    "Seat capacity" is the key metric airlines use to measure supply.   You can think of it like "drilling capacity" for the oil drillers.

Historically airlines would vastly increase their seat capacity with borrowed money during times of prosperity which would come crashing down during a recession where suddenly nobody was their to fill those seats - meanwhile the airlines owed money on all those planes they just bought.    It never ended well.     THe one I worked for went under.

Consolidation in the industry and coordination on seat capacity has made the airline industry legitimately investable probably for the first time in its history....until this.    What are they suppossed to do?   Most of their employees are salaried and thats a huge expense - not to mention pension funding.    Most domestic flights require 80% passenger load to break even.   Half the fligths are cancelled right now and the ones that aren't are only flying at 50% capacity.       

This isn't like 2008 where you had some scumbag banks defrauding their customers while handing out bogus loans to anyone with a pulse.   Airlines, restaurants, hotels, barber shops didn't create this mess - they're just the ones taking it on the chin the most.    I dont begrudge the context of them getting a lifeline from the government.   

I do not want to see the airlines bailed out.

Kevin, that sounds like a very fair option but I doubt the senate will even consider such a thing as we just throw cash at them!