Friday, March 20, 2020

Should we bail out the airlines?

On one hand, this isn't a normal downturn. 

But, on the other hand:
1. Airlines spent 96% of their free cash flow on stock buy backs, instead of a rainy day fund.  
2. If an airline goes bankrupt, it's not the end of the world. The planes and skilled employees are still there. Someone could buy their assets out of bankruptcy, and start a new airline tomorrow.
3. We bailed them out after 9/11, and they still (except for Southwest) went bankrupt.

© 2020 Praveen Puri