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Forum » Airlines want a bailout
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Thread: Airlines want a bailout

post 1600163401 03-19-2020, 04:19 AM
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#211
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Originally Posted By FA*******⏩
Why do you think their ticket prices are so low, brah. They're already at the optimum point on their supply/demand curve. They raise prices by 15%, they get more than 15% less flyers. Again, strong senior financial analyzing ITT.
Doesn’t sound like you e studied economics beyond the 4th grade. That’s not how it works in the airline industry where you are squeezing competitors off your routes and are prepared to make a loss to do so
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post 1600163771 03-19-2020, 04:35 AM
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#212
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Originally Posted By blakus_javus⏩
OOf, OP went in dry.

It's funny how capitalism rules & market freedom rules when they are raking in cash, but all of a sudden the public they made the money off is expected to bail them out with federal tax money whenever they face a loss...

Oil is cheaper than ever, they should be able to run at a profit once travel restarts.

If they cant survive a few months of hardship then they deserve to go down. Some airlines should go bust. Hard times are supposed to winnow out less effective companies.
They used 96% of their FCF in 2019 to buy back their shares. An action that has virtually no impact on operations or workers and only benefits stock prices, ratios, executive comp, and huge shareholders. This is how many large companies have used their massive tax cuts. To buy back stock, not increase compensation and not re-invest in their company.

Screw the airlines.
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post 1600163891 03-19-2020, 04:40 AM
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#213
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Originally Posted By VegasLifter26⏩
who is going to fix this mess then? And dont say the US govt because they have no idea how to properly run an airline company
Just lol at trying to say the same execs who so mismanaged their cash flow that they couldn't handle a two week downturn without asking for a government handout. My company has 150 days cash on hand just for emergencies like this.
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Holy crap dude, Satan's huge crew.
post 1600164451 03-19-2020, 05:04 AM
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#214
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yeah what happened to all the money they make every year?
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post 1600166011 03-19-2020, 05:44 AM
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#215
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If the air lines fail, our economy would get decimated. Air Ports bring 10's of billions of dollars of economic activity to their cities. If the Air Lines stopped operating, we'd feel their effects. The reason you do bailouts is to keep companies that would drastically affect the economy from going under. Some of you guys are comparing a major Air Line with a local bakery. If the Bakery goes out, no one really gets affected, but if an international air line that's rooted across the entire US goes under, it indirectly affects everyone. Air Lines at most could float maybe 3-4 months while slashing costs all over the place. Air Lines have an average of 9-10% Profit margin, which really isn't as good as you'd think it was. US Automakers got a bail out which was aimed at saving 10 Million Jobs. US Air Lines directly affect 10 Million Jobs as well, so if they went under it would be catastrophic for our economy. Nobody ever wants to pay a failing business to stay open, but we need to if we want to keep the economy afloat. It's also the President shutting down all international travel which is something you could never plan for when accounting for a budget. The Air Lines are getting hit worse than 9/11.
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post 1600166861 03-19-2020, 06:11 AM
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#216
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Originally Posted By JStrez⏩
If the air lines fail, our economy would get decimated. Air Ports bring 10's of billions of dollars of economic activity to their cities. If the Air Lines stopped operating, we'd feel their effects. The reason you do bailouts is to keep companies that would drastically affect the economy from going under. Some of you guys are comparing a major Air Line with a local bakery. If the Bakery goes out, no one really gets affected, but if an international air line that's rooted across the entire US goes under, it indirectly affects everyone. Air Lines at most could float maybe 3-4 months while slashing costs all over the place. Air Lines have an average of 9-10% Profit margin, which really isn't as good as you'd think it was. US Automakers got a bail out which was aimed at saving 10 Million Jobs. US Air Lines directly affect 10 Million Jobs as well, so if they went under it would be catastrophic for our economy. Nobody ever wants to pay a failing business to stay open, but we need to if we want to keep the economy afloat. It's also the President shutting down all international travel which is something you could never plan for when accounting for a budget. The Air Lines are getting hit worse than 9/11.
Jeez thicko

If United goes bust, someone else comes in and buys the planes in a fire sale. Planes will always fly if there is demand.
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post 1600167991 03-19-2020, 06:36 AM
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#217
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Originally Posted By Hammersia⏩
Jeez thicko

If United goes bust, someone else comes in and buys the planes in a fire sale. Planes will always fly if there is demand.
There is currently no demand because the President essentially removed all demand, but it's with good reason. Nor would anyone want to buy the planes considering a lot of them are leased from airplane manufacturers. Planes are grounded, no flights, have to pay workers, on top of paying the leasing fee every month, it's not sustainable in this current market.
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post 1600169071 03-19-2020, 06:52 AM
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#218
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Sure bail them out.....if they agree to freeze fares and re do the seating to larger seats with less total seats per plane and stop overbooking. Then maybe talk some minor bailout stuff
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post 1600184071 03-19-2020, 10:44 AM
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#219
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Originally Posted By FA*******⏩
Cash-rich companies, especially in tech like Microsoft and Google, don't have nearly the capital requirements that airlines do because their products scale so easily and create such a fat margin.

For example, you pay millions to develop one new version of Windows or Microsoft Office, but then you can make infinite copies for it for nearly free. Ditto with Google's search engine.

Airlines are much more capital intensive and have much less margin to build their extra cash reserves. Microsoft gets $100 for a Windows license that costs them literally nothing to copy. United gets $100 for an LA to SF plane ticket. Hauling that one person costs about $30 just in avgas (Wiki says about 3L/0.8 gallons of jet fuel per 100km/62 miles traveled), and that's not to mention the crew's pay, the "mortgage payment" on the plane, and the fees they pay the airports for the right to land there.
Big tech companies have had Scrooge McDuck type pools of cash to swim in. Despite the big gross revenue numbers, airlines don't have that same margin.
Yes, but you can still decide to have cash reserves and not reinvest everything to shareholders, executives, buybacks, etc.

I'm for the bailout, but again, the airlines could have decided to create a larger cash reserve than they did and that way even if they had to ask for a bailout the number would have been smaller. As I said earlier, they were operating on supposedly so little cash in hand that even a small recession could have had ruined them from the sounds of it.
post 1600247041 03-20-2020, 03:55 AM
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#220
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Originally Posted By JStrez⏩
There is currently no demand because the President essentially removed all demand, but it's with good reason. Nor would anyone want to buy the planes considering a lot of them are leased from airplane manufacturers. Planes are grounded, no flights, have to pay workers, on top of paying the leasing fee every month, it's not sustainable in this current market.
You only bailout viable industries. Clearly almost all airlines need mothballing and workers compensated while they transition to jobs that are actually needed at the moment.
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