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Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

bloomberg.com

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Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#51

Post by aantix »

akg_67 wrote: post #33
dougweltman wrote: post #30

FCF is supposed to go to shareholders: it's what's left over after spending money running and growing the business. And this problem (and related solutions) will probably apply not just to airlines but also restaurants, retailers, etc. In normal circumstances, chewz is right and they should either call up more capital from existing shareholders or go under. But these are not normal circumstances. 1) Everyone is capit…

Capitalize profits socialize losses that is American corporate way. Executives keep the profit and expect taxpayers to bailout losses.

"Barack Obama says banks paid back all the federal bailout money"

https://www.politifact.com/factchecks/2012/oct/25/barack-oba...

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#52

Post by 55555 »

dforrestwilson wrote: post #17

Worth noting that this will be the 3rd industry which Warren Buffett has been both invested in and bailed out of during a crisis.

That could be part of his investment strategy. In which case, I gotta give credit where it may be due.

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#53

Post by lordnacho »

roenxi wrote: post #15
lordnacho wrote: post #10

Earlier quoted context omitted.

They could hold on to some, just in case there was a disturbance that caused cashflow to stop for a while.

Then the money would probably not be free cash. It would be held under some sort of actuarial title for dealing with risk. Maybe amortization? I'm not an accountant. If the business needs it to sustain operations then it probably isn't free cash flow.

No, there's no actuarial or accountancy reason they'd have to do that. It's no different from someone running a restaurant business saving some in the bank instead of taking it all out.

The cash flow is "free" in the sense that you don't owe it to someone else, eg salaries, suppliers, etc. You can save it in a pot if you feel like it.

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#54

Post by zipwitch »

projectileboy wrote: post #4

So then they won’t mind trading stock to the government for cash, right? Hah... never met a corporate executive who didn’t magically become a socialist when the chips were down.

The government picking well-connected winners for private profit is just "American capitalism".

As for socialism, I'll quote Harry Truman's 1952 speech,

   "Socialism is a scare word they have hurled at every advance the people have made in the last 20 years.

    Socialism is what they called public power.

    Socialism is what they called social security.

    Socialism is what they called farm price supports.

    Socialism is what they called bank deposit insurance.

    Socialism is what they called the growth of free and 
    independent labor organizations.

    Socialism is their name for almost anything that helps 
    all the people."

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#55

Post by ddeck »

AznHisoka wrote: post #45
tomp wrote: post #43

Earlier quoted context omitted.

Dividends and share buybacks are economically equivalent, the only difference is tax efficiency.

While true, my point is they were already returning cash to investors in the form of a dividend. Why the need to do outrageously huge buybacks if they were already doing so?

Because buying back shares is typically better for non US investors.

I don't live in the US and I am not a US citizen, but if I owned those American Airlines shares, I'd need to pay 30% withholding tax to the US government on that dividend (strictly speaking it's withheld vs. actively paid).

That's in addition to taxes that need to paid in one's own country (assuming no dual taxation treaty).

With a share buyback, the share price rises (ideally) instead and when it is sold, there's no US tax on the capital gain for non resident non citizens.

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#56

Post by dboreham »

op00to wrote: post #50
senordevnyc wrote: post #22

Earlier quoted context omitted.

We’re talking about airlines, not Boeing. How much R&D should they be doing?

I'd support research in getting me off the plane without having to have someone's fat, stinky, fart-loaded ass in my face for 15 minutes, then waiting in line for another 15 minutes to get off the plane as I bash other people with my bag. Maybe they could throw a few billion at that.

That problem can probably be solved with a small dose of common sense.

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#57

Post by sauwan »

tyfon wrote: post #37
sub7 wrote: post #24

Btw most of these shareholders have been smart enough to sell immediately when the markets began falling so they will buy these stocks at the bottom and get bailed out all over again by the taxpayer and watch the capital multiply. I'm all for getting rich but pump and dumps should be (are?) illegal.

If they're bailed out the government should take over the stock and if they survive the government can recoup the money it cost to bail them out by selling stock again. It's how it works in most countries at least.

[flagged]

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#58

Post by [deleted] »

dougweltman wrote: post #30

FCF is supposed to go to shareholders: it's what's left over after spending money running and growing the business. And this problem (and related solutions) will probably apply not just to airlines but also restaurants, retailers, etc. In normal circumstances, chewz is right and they should either call up more capital from existing shareholders or go under. But these are not normal circumstances. 1) Everyone is capit…

[deleted]

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#59

Post by timwaagh »

dougweltman wrote: post #30

FCF is supposed to go to shareholders: it's what's left over after spending money running and growing the business. And this problem (and related solutions) will probably apply not just to airlines but also restaurants, retailers, etc. In normal circumstances, chewz is right and they should either call up more capital from existing shareholders or go under. But these are not normal circumstances. 1) Everyone is capit…

they are airlines, not banks. They are important but we need not fear collapse if they disappear. No doubt some will survive, somehow. Saving them would not be a waste of money, but the money can be better spent. For example on disease control and medical care.

Re: Biggest U.S. airlines spent bulk of free cash flow on stock repurchases

#60

Post by EarthIsHome »

tomp wrote: post #44
roenxi wrote: post #40

Earlier quoted context omitted.

If they go under the aircraft will still be there. Just new owners. Ban foreign buyouts then let them go bankrupt and be sold to the highest bidders. We're about due for different owners of capital; the situation has been far too static. The bailouts in '08 kept a bunch of very poor managers in charge. 100% wipe-outs were appropriate in '08, and they will be appropriate again this time. Of all the people we need to f…

Just don't forget that a lot of "capitalists" are pensioners, college endowments, etc.

Pensioners and wage earners are not capitalists. They depend on wages to live. Calling yourself a capitalist doesn't make you have capital.

True capitalists are those who do not need wages (e.g. CEOs of airliners, billionaires, etc.).

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