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America's bailed-out airlines are not 'playing fair' with customers

finance.yahoo.com

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Re: America's bailed-out airlines are not 'playing fair' with customers

#141

Post by golergka »

orthecreedence wrote: post #20
JumpCrisscross wrote: post #9

Earlier quoted context omitted.

> A board/council of nationally elected representatives should manage whatever share of these companies the government owns This has succeeded practically zero times in the history of nationalisation. Transitioning a culture from private ownership to public is highly value destroying. And putting electeds in charge of companies goes about as one would expect in terms of venality and competence. The better strategy is…

> Transitioning a culture from private ownership to public is highly value destroying You know what else is value-destroying? Giving money to failed companies for free. Everyone's a capitalist until something bad happens, then they go running to Free Money Center to pick up their welfare check. > And putting electeds in charge of companies goes about as one would expect in terms of venality and competence. Yes, faili…

> Giving money to failed companies for free.

That's not what bailouts are.

Re: America's bailed-out airlines are not 'playing fair' with customers

#142

Post by dang »

iso1210 wrote: post #31

Privatize the profits, Socialize the losses, that's the American Dream.

Maybe so, but please don't post unsubstantive comments (like mechanical tropes) to HN. They lead to predictable and therefore tedious and therefore off-topic, generic discussion.

We detached this subthread from https://news.ycombinator.com/item?id=22712653.

Re: America's bailed-out airlines are not 'playing fair' with customers

#143

Post by viklove »

wpasc wrote: post #83
jliptzin wrote: post #50

The pandemic is not their fault, but it is their fault for not being prepared for something like it. It’s even listed as a risk factor in investor disclosures, so it’s not totally unforeseen. An electrical fire can burn your house down through no fault of your own, and that’s why you have homeowner’s insurance. How about keeping cash in reserves instead of doing huge stock buybacks the last 10 years? How about having…

Keeping large cash on hand for highly rare black swan events is a pretty inefficient allocation of capital. If all companies kept enough cash to not earn revenue for months and pay all expenses for a once in a hundred year event, then a significant portion of money in all the U.S. economy would just sit as cash and not be allocated to investment, hiring, etc. Just a counter argument.

Yes, that is why we share the risk with this handy concept called insurance.

Re: America's bailed-out airlines are not 'playing fair' with customers

#144

Post by dang »

Der_Einzige wrote: post #134
dvtrn wrote: post #6

Earlier quoted context omitted.

“HN isn't a place for general political arguments” I wish we’d stop lying to ourselves about this.

Yeah that rule is extremely stupid. Please do what you can to make the mods and admins realize that this rule should be removed. Politics is fascinating. HN is absolutely a good forum for it and it already is basically unenforced.

What rule are you referring to?

Re: America's bailed-out airlines are not 'playing fair' with customers

#145

Post by MetalGuru »

golergka wrote: post #140
orthecreedence wrote: post #4

If we give bail outs, we should get stock/control. End of story. All bailed out companies should be nationalized to some extent, depending on the value of their stock and how much the government buys. A board/council of nationally elected representatives should manage whatever share of these companies the government owns. It's time the citizens started getting a return on their tax dollars if they're being used for p…

> It's time the citizens started getting a return on their tax dollars if they're being used for private investment. US citizens have already seen massive return on their 2008 bailout. These bailouts aren't free money, they're just loans that get paid back, with interest.

While I think the widespread negative reaction to bailouts is generally uninformed, the interest rates on bank bailouts was ridiculously low. And from what I understand, banks spent it in self-serving ways like stock buybacks and fat executive bonuses. I mean, why wouldn’t they. Without oversight, their priority is to shareholders.

Re: America's bailed-out airlines are not 'playing fair' with customers

#146

Post by kingaillas »

chki wrote: post #22
tehwebguy wrote: post #16

Earlier quoted context omitted.

This is a bad faith question. The real question is, “Why were the airlines so poorly equipped to handle a cataclysmic event when the last one was only 19 years ago?” The answer is short term profitability. And the follow up question is, “Why would ANYONE bail any for-profit company out to the benefit of the shareholders only, ever?”

How could an airline company possibly be equipped to handle this kind of situation? If you want to be competitive on the market you need to lower costs and cut down on margins. You can't just have a big pile of money lying around "in case all flight is halted for a few weeks/months"

>If you want to be competitive on the market you need to lower costs and cut down on margins.

Or, maybe such a business model isn't (and shouldn't) be supported by the current rules of the free market. I would say "you can't just toss in billions on average every few years" and call that a legit business model for a for-profit private corporation.

Re: America's bailed-out airlines are not 'playing fair' with customers

#147

Post by the8472 »

wpasc wrote: post #83
jliptzin wrote: post #50

The pandemic is not their fault, but it is their fault for not being prepared for something like it. It’s even listed as a risk factor in investor disclosures, so it’s not totally unforeseen. An electrical fire can burn your house down through no fault of your own, and that’s why you have homeowner’s insurance. How about keeping cash in reserves instead of doing huge stock buybacks the last 10 years? How about having…

Keeping large cash on hand for highly rare black swan events is a pretty inefficient allocation of capital. If all companies kept enough cash to not earn revenue for months and pay all expenses for a once in a hundred year event, then a significant portion of money in all the U.S. economy would just sit as cash and not be allocated to investment, hiring, etc. Just a counter argument.

I don't think it's correct to label this a black swam event. Pandemics are known to occur repeatedly, we had lesser ones in the 20 years and major international organizations were planning for them. The whole world were looking at china and with a seeing did nothing, including the airlines. Well, not everyone, just most. Some countries did shut down travel to and from china immediately and instated screening.

Had airlines shown the same foresight as those countries they could have shut down service to china as a "supportive measure" for the containment and enjoyed continuing profits in the rest of the world. They didn't.

Perhaps this is a matter of biases and misaligned incentives. In europe airlines were even flying empty just to retain their airport slots. But biases and incentives just mean you're very much aware of the black swans in front of you, you're just ignoring them willfully.

Relabeling these things as black swan events does a disfavor to everyone because they can just throw up their arms and say it was higher force instead of reflecting on the deeper structural issues instead of just working on specifically pandemic-related ones.

Re: America's bailed-out airlines are not 'playing fair' with customers

#148

Post by Retric »

jdsully wrote: post #131
Retric wrote: post #110

Earlier quoted context omitted.

The government got shafted by vastly below market returns. Economists are looking at the big picture but tend to ignore people picking your pockets as insignificant. Loss aversion means people actually care about these things, it’s just the simplified economic models that are ignoring them.

The government wasn't looking to maximize their return, if they were they wouldn't have included such huge protections for GM union workers. I don't think return maximization in a micro sense was the right approach anyways. The government got its pound of flesh through the increased tax revenue it generated by not having the economy implode.

> The government wasn’t looking to maximize their return

Someone was, the simple word you looking for is corruption. The end goal of a corrupt state might be to build a road, but the specific cash flow ending up in well connected hands has absolutely nothing to do with the stated goal.

Re: America's bailed-out airlines are not 'playing fair' with customers

#149

Post by ceejayoz »

tracer4201 wrote: post #133
ceejayoz wrote: post #94

Earlier quoted context omitted.

For you or I, yes. We aren’t big enough to put “saved the economy” in the pros column.

I’m not sure that saved the economy. If GM failed, someone else can and would take their previous share of the market. In the short term there’s pain for GM employees, suppliers, etc. but in the long term, corporate america realizes their losses won’t be socialized. It blows my mind this country of anti socialism whose media was comparing my native country (Denmark) to Venezuela is so much against the common man but…

The GM bailout was, in essence, a partial and temporary nationalization. The losses weren't socialized; again, the US taxpayer made a small profit off the rescue program.

I'm all for a critique of the American attitude that "socialism" is automatically bad and the tendency to call basically anything that isn't a gun show "socialist", but TARP etc. isn't a great example of that attitude.

Re: America's bailed-out airlines are not 'playing fair' with customers

#150

Post by Der_Einzige »

dang wrote: post #144
Der_Einzige wrote: post #134

Earlier quoted context omitted.

Yeah that rule is extremely stupid. Please do what you can to make the mods and admins realize that this rule should be removed. Politics is fascinating. HN is absolutely a good forum for it and it already is basically unenforced.

What rule are you referring to?

Not to post political stuff on HN
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