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German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
31–40 of 178 posts
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#32What does this mean in the context of state aid rules?
I'm quite worried that the EU's attempts to pick up the pieces of the economic carnage will clash with Britain's attempts. Inability to agree what counts as fair, will be a major block in any negotiation, and catalyse the economic partition of Brexit.
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#33>The company will take the money but the state won't get a say: this is a concise summary of what Lufthansa's Executive Board, headed by CEO Carsten Spohr, has been telling German politicians in the past few weeks.
That's awesome.
Create a crappy business, hire 130k employees, and get the state to pay for your failures.
At this point, I would be happier that they would just give the money to Google and Facebook which proved that they know a thing or two on creating value and sustainable business.
Obviously, airlines that have been doing fine (Ryanair, Wizzair?), won't get a dime which seems completely absurd. I did some quick googling and apparently Ryanair has similar opinion: https://www.bloomberg.com/news/articles/2020-04-24/ryanair-s...
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#34Earlier quoted context omitted.
No, we can't let them fail, that'd be capitalism!
Many major national carriers have national importance. So, no, they won't go bankrupt. Be it Lufthansa, Air France, Air China, or whatever. Airlines like Ryanair and Wizz air might be different.
The difference is there isn't a predominant American legacy airline. AA is only marginally larger than Delta or United. Personally, having never lived in their hub or focus cities I have rarely ever flown them, and it's conceivable that the national value of LH or AF to their countries is greater than AA.
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#35Earlier quoted context omitted.
No, we can't let them fail, that'd be capitalism!
Many major national carriers have national importance. So, no, they won't go bankrupt. Be it Lufthansa, Air France, Air China, or whatever. Airlines like Ryanair and Wizz air might be different.
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Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#36Yahoo finance says their market cap is 4 billion [0] and yet they are getting a bailout worth 2.5 times their market cap. That's crazy. [0]: https://finance.yahoo.com/quote/lha.de/
I think Matt Levine has pointed out before that the amount of money it would take to keep US airlines going was likely to be more than their pre-Covid market cap. It's a big reason why the idea that they should just have saved up enough money to not need bailouts instead of paying out to shareholders is a non-starter; the value of the airlines to shareholders is less than the amount it would cost, because air travel is so cheap and low margin. In some very real sense, the profits from not saving up have already been socialized - everyone who travels by air or buys goods shipped that way has benefited from it - and so there's no alternative to socializing the losses too if we want airlines to exist after this.
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#37What does this mean in the context of state aid rules? I'm quite worried that the EU's attempts to pick up the pieces of the economic carnage will clash with Britain's attempts. Inability to agree what counts as fair, will be a major block in any negotiation, and catalyse the economic partition of Brexit.
The EU has temporarily removed state aid rules.
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#38Earlier quoted context omitted.
No, we can't let them fail, that'd be capitalism!
Many major national carriers have national importance. So, no, they won't go bankrupt. Be it Lufthansa, Air France, Air China, or whatever. Airlines like Ryanair and Wizz air might be different.
Curious what you mean by “national importance?” Do you mean ego/national pride, or that without a state provided carrier there would be no flights (unlikely for a Germany or Belgium, but possible for, say, the Marshall Islands or Togo)? Or that there is some sort of treaty-mandated interlink that requires a designated flag carrier (I know this last case was true decades ago, but I’m not sure the US even has one any more)?
Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid
#39What does this mean in the context of state aid rules? I'm quite worried that the EU's attempts to pick up the pieces of the economic carnage will clash with Britain's attempts. Inability to agree what counts as fair, will be a major block in any negotiation, and catalyse the economic partition of Brexit.
It means that the wealthy states get wealthier and the poorer get poorer. State aid rules have been massively relaxed, but the structural problems with the eurozone that mean Germany can afford to bail out their businesses like this and other poorer, worse-hit countries cannot are still there. I'm not sure Brexit is the EU-related economic partition we should be most worried about right now.