Earlier this month, we looked at the congressional proposal to bail out the airlines, presumably to keep all of their employees on the job. To say that I was unimpressed with the broad outlines of the plan is a bit of an understatement. There was too much “free money” (meaning your money) involved and not enough assurances that the main benefactors would be the public rather than the airlines’ stockholders.
Well, the Treasury Department has now announced that a deal has been made and the major airlines will have a bailout available if they wish to take advantage of it. Suffice it to say that the final details don’t look all that much better than what was originally being discussed. (NBC News)
Ten of the country’s largest airlines, including American, Delta and United, are to receive a slice of the $25 billion Payroll Support Program…
Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines “have all told us that they plan to participate in the Payroll Support Program,” according to a statement from Mnuchin.
American Airlines said it had received a $5.8 billion package. The relief includes $4.1 billion in direct support, along with a $1.7 billion low-interest loan. American Airlines also expects to apply for a loan from the Treasury for around $4.75 billion, the Texas-based company said in a statement.
In addition to the more than four billion dollar grant to American Airlines, Southwest will be receiving nearly two and a half billion that they won’t have to pay back. Other airlines are expected to be pushing their snouts up to the trough in short order.
What sort of assurances did we receive from the airlines in exchange for all of this taxpayer generosity? There weren’t many specifics offered in the announcement beyond some vague descriptions of, “limits on stock buybacks, dividends and executive compensation.” If you expected any promises to improve their service, restore some of our legroom and make flying economy class less of a nightmare, dream on.
Why was the Treasury Department ever talking about “limits” on stock buybacks? If the airlines are in that much financial trouble and are so worried about keeping their workers on the payroll, there shouldn’t be one dollar going into any stock buybacks until every penny of those loans is repaid and they’ve proven that they kept their workers off the unemployment lines. As for dividends, those are supposed to be given out to shareholders as a reflection of the company’s profits. Since when does a business teetering on the edge of bankruptcy go handing out dividends? Again, there should be none until their business with Uncle Sam and the public is responsibly concluded.
While I’ve brought this up before, it bears repeating. None of this should have been considered necessary. If there isn’t enough traffic to justify keeping all of those workers on the payroll, they could all qualify for federally enhanced unemployment benefits just like every other American that’s been locked out of their jobs until air travel returns to normal volumes. I don’t see Congress doling out money to restaurants to keep the wait staff employed when they’re not serving any food.
The President has been complicit in this fiasco as well, by the way. Despite originally saying he opposed the idea, Trump later came around and insisted that we “can’t let the airlines go out of business.” But the airlines weren’t going to go out of business even if they didn’t get a dime from Congress. They would have sought bankruptcy protection just as nearly every one of them did between 2002 and 2011, emerging intact after travel patterns return to normal.
But it’s too late now, I suppose. Our politicians have to make sure that they look like they’re “doing something” (anything!) during this crisis. So they’ll just keep taking huge chunks of our GDP and setting them on fire.