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German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

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Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#141

Earlier quoted context omitted.

Not only Germans but whole EU. The way EU works is by letting monopolies in a few west European countries expand their market to east and capture more value from everywhere. Yes, East European companies can also do that but usually, there is first mover advantage and other policies at local level which influence the ability to form monopoly through investment and expansion.

I'd love to know why downvoters disagree, if you start a competition between companies where some companies have better technology, state help or finance and put them against companies who don't have all that, yes big companies are more likely to become bigger if you combine the market where all these companies operate.

Perhaps because the claim "The way EU works is by letting monopolies in a few west European countries expand their market to east" is clearly ludicrous as a summary of how the EU works?

I mean, the EU - ignoring the name changes over the years - had existed for over 30 years before the fall of the Iron curtain and nearly 50 years before admitting new members from the the East. The idea that the whole thing was set-up and run based on the goal of economically exploiting recent entrants from the East decades in the future is simply silly.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#142
post #78

For the sake of argument.... What happens if no airline gets any bail-out money? Do we end up with worse air travel in a year or two?

You end up with air travel only between major cities and a lot of government-owned airports which are empty and lose money.

That may be a point for the US, but not so much for Germany. We already only have air travel between major cities as the country isn't that big. We do have small regional airports, but they are mostly for hobbyists and private planes, not for Lufthansa & commercial airlines.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#143

Sadly, France and The Netherlands bailing out Air France and KLM last week, resp., forced the hand and diminished leverage for the German federal state I guess. I thought subsidies (to former state monopolies, of all things) was the one thing that need explicit consent under EU treaties. Now the people of DE, FR, and NL have to bail out a business that has no perspective to return a profit for the foreseeable future.…

[deleted]

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#144

Question: Lufthansa's market cap is less than 5Bn, why is the German government not buying it for that amount, bailing it, then (hopefully) selling it in a decade when the situation improves? France is bailing Air France, Germany is bailing Lufthansa, what does it mean for a company like EasyJet? Will it get bailed too or just crash due to governments helping some companies but not others?

Market cap tells you only the story of the equity. It doesn't include the liabilities.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#145
post #141

Earlier quoted context omitted.

I'd love to know why downvoters disagree, if you start a competition between companies where some companies have better technology, state help or finance and put them against companies who don't have all that, yes big companies are more likely to become bigger if you combine the market where all these companies operate.

Perhaps because the claim "The way EU works is by letting monopolies in a few west European countries expand their market to east" is clearly ludicrous as a summary of how the EU works? I mean, the EU - ignoring the name changes over the years - had existed for over 30 years before the fall of the Iron curtain and nearly 50 years before admitting new members from the the East. The idea that the whole thing was set-up…

If it didn't work this way, protectionism wouldn't exist.

There are various economics models which show Germany has benefited the most from creation of EU

Sure countries in middle of Europe and east are improving their baseline but it's nothing compared to what Germany has achieved.

Germany is effectively china of EU.

It's funny to see the same people who oppose China's currency manipulation are in favour of EU

I suggest you read this: https://www.conradbastable.com/essays/the-germany-shock-the-...

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#146

Earlier quoted context omitted.

Ryanair isn't 'doing fine', it's trying to force customers to accept vouchers instead of the cash refunds it is legally obliged to provide. And the idea that Google and Facebook could do a good job of maintaining the profitability of an airline whilst being obliged to pay the capital costs of aircraft it's banned from flying is the epitome of Silicon Valley arrogance. Let's be honest, Google and Facebook haven't even…

Can confirm, they have £1k of my money, which they've held on to for over a month already, and are refusing to refund. It looks like it will be several months at best before they refund it. I plan to do a chargeback in the meantime. I get that Ryanair are in financial difficulties, but they can't expect their customers to bail them out, and are behaving unlawfully - I'm damn sure I wouldn't get away with it, so neith…

It's not only Ryanair - Air France are doing the same.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#147
post #48

One thing that I think the business world has finally learned during the COVID-19 social distancing is that business travel isn't nearly so important as we had imagined. And attending conferences was always fun but it's been amazing to watch how fast conferences have switched to an on-line format (well ... the technical ones that I would attend). So it's my opinion that the airlines, hotels, conference centers and ta…

This might be true but also sounds like it's spoken from a very privileged position.

There's probably (tens of?) millions of workers around the world separated from their families. It's not only about tourism and business travel.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#148

>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…

I normally do not like listening to the "blunt talking" Michael O'Leary but there's something extremely refreshing about an airline CEO stating bluntly that airlines should NOT be given bailouts by governments. The way he sticks to to Richard Branson (billionaire living in a tax shelter asking the UK government to bail-out one of his ventures) is particularly satisfying. It's just after 3:45 into https://www.youtube.com/watch?v=jtccxnEmfeM

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#149
post #4

Does it mean that every german will have to pay about $10B / 80m = 125 euros for that ? So it means that they'll have, for example, to wait a little longer to buy their next phone, or lunch ? (I ask the question here because that's the kind of reasoning I read in the press but I'd like to know if it's as simple as that)

Nope. Because they have already paid all of this in taxes. It means, that the 10 bn won't get 'invested' by the government in another project, e.g., welfare benefits, infrastructure, health, or education. Alternatively, it means: nothing of all of those, but inflation will rise an additional 0.0001% (if the funding source is printing money vs. using tax payer money)

> Nope. Because they have already paid all of this in taxes. It means, that the 10 bn won't get 'invested' by the government in another project, e.g., welfare benefits, infrastructure, health, or education.

Knowing the German government, I wouldn't be worried about welfare and healthcare (they're too important to get the votes).

But you're right about infrastructure and education. You can throw defence and internal security with that.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#150

Earlier quoted context omitted.

Airline is the infrastructure tho, cheap air travel is available throughout EU. If you remove that, economy will take major hit. There is hardly any reading block with cooperation like EU. You fly from France to Italy and work with people there then you fly to Switzerland and demonstrate your product their and then you deal with marketing agency in UK to market your products at global level. It becomes inefficient wi…

Lufthansa is never close to cheap flights...

Yes, quite the contrary. It's one of maybe 10 five stars airlines. It's an elite airline.
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