
America's bailed-out airlines are not 'playing fair' with customers - Alupis
https://finance.yahoo.com/news/americas-bailedout-airlines-are-not-playing-fair-with-customers-travel-expert-says-114038635.html
======
orthecreedence
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 private investment.

~~~
T-hawk
Serious question: do we have historical comparisons, can we refer to instances
where nationalizing in the wake of a bailout led to positive results?

The one comparable I can think of in the US is Amtrak, which is functional
although not exactly wildly successful.

~~~
tehwebguy
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?”

~~~
chki
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"

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

Yes, exactly. There are certain businesses that should not be subject to
market forces: essential services that have tiny margins.

> You can't just have a big pile of money lying around "in case all flight is
> halted for a few weeks/months"

Then you get nationalized ¯\\_(ツ)_/¯. If you want to be privatized again, make
enough money to do buybacks.

~~~
lazylizard
Maybe you can... Berkshire Hathaway? Or even apple or google?

------
jliptzin
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 a plan to wind things down and
“hibernate” until the business can be spun back up again? No sympathy for
them. No bailout. Let them fold, let them sell the planes so new management
can manage them better.

~~~
wpasc
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.

~~~
dlp211
Holding cash does not mean that it isn't allocated to investment. The airlines
wouldn't be putting it under their mattress. They would be depositing it with
a financial institution that would then be able to use the increased reserves
to provide more capital to various actors, ie: investment.

~~~
glass_of_water
But if a rare, global event like this happens and companies' emergency funds
are mostly investments, isn't everyone going to try to liquidate their
investments, crashing prices to a level where those investments aren't worth
enough to keep them funded through the event?

~~~
dlp211
If everything stopped, that would be an issue, but in reality there is still a
ton of economic activity happening. As far a big businesses go, there are a
handful of industries that are being impacted by this pandemic and if they
were slowly drawing down on cash reserves over the next 6 months or so that
probably isn't terribly harmful.

Also, this is why Central Banks exist.

------
caseyf7
Yes, the bailout should've required all flights scheduled during shelter-in-
place to be refunded. Millions of consumer dollars tied up in airline credits
is a net drag on economic stimulus.

------
jdsully
If you were flying to europe they should be reimbursing per EU261. So far its
been hit or miss actually getting the refunds with the people I’ve helped.

Its amazing how when the contract of carriage is in the customer’s favor
somehow it no longer applies.

~~~
cbanek
Despite not having any information on American Airline's website, I was able
to get my money for a cancelled flight last year from Europe to the US (due to
technical problems on the plane) by just doing the contact us form and putting
in all the info. But of course, they didn't have any of this info listed on
their website in a way that told me I needed to do that. The check was mailed
on time, and I was actually pretty surprised.

Definitely try to get your money under the EU regulations! It's worth the
time.

~~~
jdsully
In normal times you should also get 600EUR in additional compensation although
they fight hard against that. Obviously this doesn’t apply here.

------
aczerepinski
I don't understand why we can't let them go bankrupt. Presumably at least a
couple of the airlines could raise money by selling more stock or getting
acquired by somebody like Berkshire. The rest would go through chapter 11 and
come out of it being owned by somebody else. We could use the 2 trillion to
support the employees.

What am I missing?

~~~
ahelwer
What you're missing is that both political parties in the states are beholden
to capital interests, and so the reason "we" can't let them go bankrupt is it
would work against those interests. This isn't a conspiracy theory, there
don't even need to be conspirators for it to work this way. With very few
exceptions you are only capable of getting elected if you believe in the
supremacy of the needs of capital. The only thing that can really stand
against this is a strong organized worker's movement, which has been
systematically dismantled over the past 70 years.

------
godzillabrennus
We (the Tax payers) did earn billions bailing out the banks.

[https://money.usnews.com/investing/articles/2017-01-19/finan...](https://money.usnews.com/investing/articles/2017-01-19/financial-
crisis-bailouts-have-earned-taxpayers-billions)

We should still have seen banksters going to jail over their clearly crooked
and irresponsible behavior.

~~~
viklove
That article does not conclusively show the taxpayer benefited from the
bailout. All it shows is that the stock price went up. If the money is then
used to subsidize airlines, telecom companies, etc. and ultimately used for
stock buybacks, exec bonuses, etc. then the taxpayer is never seeing any of
that money.

------
llampx
Serious question: does anyone actually expect the government (at least the
current administration, of the US) to do what's right for the little guy?

~~~
macintux
As much as I'd love to pile on to this question, HN isn't a place for general
political arguments, and this isn't a productive discussion for this site.

~~~
dvtrn
“HN isn't a place for general political arguments”

I wish we’d stop lying to ourselves about this.

~~~
thedance
"we" aren't lying about it to ourselves. It's enforced from the top down
because VCs (such as the benefactors of this site) strongly prefer that their
founders ignore culture and society to focus 100% on business. The lack of
politics on HN is not some kind of community consensus.

~~~
dang
HN has plenty of political, cultural, and social threads. I'm surprised you
haven't noticed them. See
[https://news.ycombinator.com/item?id=22714705](https://news.ycombinator.com/item?id=22714705)
and
[https://news.ycombinator.com/item?id=17014869](https://news.ycombinator.com/item?id=17014869)
for more explanation.

Political topics take over everything if you let them, so we have to moderate
HN to prevent it from becoming all-politics-all-flamewar-all-the-time. Do you
think we should just let it burn?

Nobody's trying to "enforce" anyone to "focus 100% on business". I do worry
whether users' addictions to sites like this keep them from doing better
things.

------
tyingq
Hard problem. They are working with < 12 percent load factors when 60% s break
even is reality. I expect a lot of adjustments this week.

------
Merrill
The airline industry needs to be resized as well as bailed out.

Business travel will be permanently impacted by the shift to digital
communications that is being forced upon business now.

Leisure travel will not come back until there is a Covid-19 vaccine, which is
12 to 18 months at least. Even then, higher ticket prices due to the lack of
the more profitable business travelers, combined with a lack of consumer
expendable income, will curtail demand for another year or two.

------
iso1210
Privatize the profits, Socialize the losses, that's the American Dream.

~~~
hkmurakami
They often result in solid financial returns for the government holder of
equity.

~~~
sfkdjf9j3j
Is that actually true? TARP cost $426 billion in 2008 and when the assets were
finally sold off in 2014, they summed $442 billion. So that's a 3.7% return
during a time when the s&p 500 more than doubled in value.

Do you have some examples where the government made these returns?

~~~
reilly3000
Right but they maintained a whole tax producing economic center including
(probably) corporate taxes and income tax on hundreds of thousands of wages
from the companies themselves and their suppliers. Breaking even on a bailout
is pretty phenomenal given the broader implications.

~~~
Retric
That assumes they had no leverage and no other options. Raising the rates by
say 4% and companies would still have taken the money and the economy would
have reacted in the same way.

------
Reedx
The government is failing badly at every level. That's more clear now than
ever. Serious question: Why would you want to give them more to fail at?

~~~
pgsbathhouse2
>The government is failing badly at every level.

Just the executive branch, which was elected by a certain segment of our
society.

Thankfully (hopefully) it only lasts 4 years, and not 20.

~~~
evv
Just the executive branch? You should look into the corporate manipulation of
the legislative branch- buying elections with PACs, gerrymandering, voter
suppression, the filibuster, extreme partisanship on every topic except the
protection of wealthy donors...

~~~
smoyer
Senators and Congressmen selling off their stock after private briefings about
COVID-19 is a pretty good example of how the legislative branch is no better.
They probably could have weathered the storm pretty well ... those of us in
the middle class have taken a material hit to our retirement prospects.

