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More Details on US Airline Aid

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The bailouts are no surprise, but I wonder what the rationale is for giving the airlines sufficient money that they won’t need to lay off a bunch of employees who are surplus at least until August while employers in so many other sectors are cutting staff.  

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from the point any bailout is granted the airlines should no longer be allowed from that day forward to do a stock buyback.  That would be buying stock with Taxpayer Money.

 

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48 minutes ago, boestar said:

from the point any bailout is granted the airlines should no longer be allowed from that day forward to do a stock buyback.  That would be buying stock with Taxpayer Money.

 

The buy backs benefit the shareholders so if you wanted that benefit you could get it by being a shareholder.  Kind of reminds me of how everyone will complain about the "Big 6" banks and their obscene profits while almost every Canadian holds mutual funds that are, primarily, Canadian bank stocks - if the banks broke even or lost money your retirement mutual fund would track the same path.

 

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The point is, stock buybacks strip the company of the cash assets that could help them through a downturn. So if taxpayers are going to bail them out, preventing that should be one of the conditions.

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48 minutes ago, J.O. said:

The point is, stock buybacks strip the company of the cash assets that could help them through a downturn. So if taxpayers are going to bail them out, preventing that should be one of the conditions.

I'm basically in agreement with you so don't take this as if I'm arguing - just throwing out a few points as they occur to me.  Stock buybacks reduce tax payable (I believe), having a big pile of cash makes it harder for the company to hold off employee contract requests, and harder to negotiate deals from suppliers.  Ideally a company would have a cash float to be prepared for the unexpected, just saying it's more complicated than simply rewarding the shareholders.

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Still.  If the government bails them out then the buyback is at the taxpayers expense.  If I wanted to buy airline stock I would buy airline stock.

 

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U.S. Airline grant details:

- Job guarantees (no involuntary layoff)

- benefit guarantees

- no concessions/no changes to CBA’s

- covers Q2 and Q3 2020

 

Airlines are looking at terms and conditions. Loan program comes with other conditions including possible equity or warrant exchange. Program to be managed by Treasury Department.

 

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They will need another bailout come summer if they are going to pay people to sit around doing literally nothing. Especially, since most of those employees are likely to be told to stay at home and self-isolate.

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1 minute ago, dagger said:

They will need another bailout come summer if they are going to pay people to sit around doing literally nothing. Especially, since most of those employees are likely to be told to stay at home and self-isolate.

If the recovery has not begun by September, the financial support required will double or triple. Current passenger reduction measured YOY is 85%. April and May passenger reduction will be even higher.

Entirely possible to see CH11 filings after September absent recovery unless lease payment deferrals or lease terminations are reached consensually. 

Also possible that airlines have cross default language in other credit agreements.

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Good old DT is saying the problem of medical supplies is not his problem, it was the problem of the previous administration and that he knew it was a pandemic before anyone else. Wants to open parts of the country "very" soon. The airlines  ???..."we will be helping the airlines, don't worry about that, they will be all right and the workers will have no problems ..in fact, we are looking after the workers now".

Apparently he wants, or is going to put, US troops on the CDN border and here he rambles on about all the tariffs he is collecting from Canada because of Canada dumping steel on USA and then he goes on a tangent about how he has NATO countries  paying their fair share now because they were not doing it under the previous administration.  

They got one sick puppy down there...

 ScreenShot001.jpg.60de6fd534f9883fccfc64c9d8ca571f.jpg

ScreenShot002.jpg.8c91a394e4d8e1ead698475d8786e930.jpg

Edited by Kip Powick
speling
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President Trump is the perfect Zaphod Beeblebrox.

Anybody get that reference (without looking it up)?

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3 hours ago, seeker said:

President Trump is the perfect Zaphod Beeblebrox.

Anybody get that reference (without looking it up)?

Didn't he have three mothers and two heads? Two-faced is close enough I guess.

Edited by J.O.

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SEC. 4117. TAX PAYER PROTECTION.
The Secretary may receive warrants, options, pre- ferred stock, debt securities, notes, or other financial in- struments issued by recipients of financial assistance under this subtitle which, in the sole determination of the Secretary, provide appropriate compensation to the Fed Government for the provision of the financial assistance.

SEC. 4114. REQUIRED ASSURANCES.
(a) IN GENERAL.—To be eligible for financial assistance under this subtitle, an air carrier or contractor shall enter into an agreement with the Secretary, or otherwise certify in such form and manner as the Secretary shall prescribe, that the air carrier or contractor shall—
(1) refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020;
(2) through September 30, 2021, ensure that neither the air carrier or contractor nor any affiliate of the air carrier or contractor may, in any transaction, purchase an equity security of the air carrier or contractor or the parent company of the air carrier or contractor that is listed on a national securities exchange;
(3) through September 30, 2021, ensure that the air carrier or contractor shall not pay dividends, or make other capital distributions, with respect to the common stock (or equivalent interest) of the air carrier or contractor;
 

 

Apparently airlines are already looking at how to comply to qualify for grant aid but mitigate direct payroll expense both now and if the travel demand downturn drags on beyond September. One concept under consideration is downgrading as many CA as possible and then significant employee layoffs effective Oct 01st. 
 

What the legislation does demonstrate is how far out ahead the US is on specifically stabilizing the airline industry. The alternative would have been CH11 filings by June.

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On 3/27/2020 at 9:40 PM, Rich Pulman said:

HHGTTG.

Yes, you are correct in the source but what I was asking is do you get the meaning of the reference?

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On 3/27/2020 at 8:09 PM, J.O. said:

 Two-faced is close enough I guess.

Nope, not close enough.  There's lots more.

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3 hours ago, seeker said:

Yes, you are correct in the source but what I was asking is do you get the meaning of the reference?

perhaps: 

Search Results

Web result with site links

The Hitchhiker's Guide to the Galaxy (sometimes referred to as HG2G, HHGTTG, H2G2, or tHGttG) is a comedy science fiction series created by Douglas Adams.

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7 hours ago, Marshall said:

The Hitchhiker's Guide to the Galaxy (sometimes referred to as HG2G, HHGTTG, H2G2, or tHGttG) is a comedy science fiction series created by Douglas Adams.

Yes, Zaphod was a character in "The Hitchhiker's Guide to the Galaxy".  Congrats on knowing/finding the reference to Rich, J.O. and Marshall but you guys still haven't got the significance to the reference.

It's just something that occurred to me and, obviously, not some earth-shattering revelation but calling Trump "Zaphod" works on many levels.

- Zaphod was the President of the Galaxy and Trump is the President of the USA - that's one.

 - Zaphod was described in the book as being "hedonistic and irresponsible, narcissistic almost to the point of solipsism, and often extremely insensitive to the feelings of those around him."  I would say that's a fair description of Trump as well - that's two.

- Zaphod is boorish, immature, impulsive and prone to temper tantrums - that's three.

 - Zaphod was briefly the President of the Galaxy (a role that involves no power whatsoever, and merely requires the incumbent to attract attention so no one wonders who's really in charge.)  This refers to the idea that the President of the USA (which changes every 4 or 8 years) is relatively insignificant to the "real" control which is held by the military-industrial complex - that's four.

Anyway, I've never heard anyone else call Trump "Zaphod" so maybe it's just me that sees the similarities but I thought it was funny.

 

 

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Just enjoy it all at the restaurant at the end of the universe.

 

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