Amid the worsening coronavirus crisis, the airline industry has taken a hard blow with a drastic decrease in passenger travel.
Those buybacks made a handful of rich executives and shareholders, much, much more wealthy, mostly tax free. Nobody else really benefited.
Share buybacks have been the greatest misallocation of resources in the history of humanity. This was all preventable.
I'm not sure that in the absence of buybacks that they would have just sat on a pile of cash (I bet some of them have some cash on hand) and paid everyone during the COVID crisis until that cash was gone. That just wouldn't make sense business wise either.
A lack of buybacks wouldn't change anything here. If you're not working these employees, you aren't going to keep paying them for long generally. Buybacks or no buybacks.
If you don't like the incentive to layoff people who aren't working for you, that's a whole other topic IMO.
And I'm not sure as far as an airline goes investment isn't going prevent any of this either.
I get the buyback problem, but laying people off who aren't working seems entirely disconnected from those topics.
sure, they will lay people off or furlough them. there's genuine problems with work at the moment. but do they want help beyond that?
If every airline needs a bailout, you might have to evaluate a program of greater scale; injecting cash directly into every airline in a coordinated effort, but taking equity and putting in place governance (with a board seat or more than one) in those needing the bailout. Those who won't accept such terms would be permitted to fail.
My apologies it's not a binary answer, and more "it depends."
Now all they seem to teach is how to maximize the stock price for the next 90 days. Just shuffle the cells around in the spreadsheet until the number looks good, that's all we're doing. Zero long term planning, zero long term safety for anyone who isn't an executive.
In general in personal finance the first rule of excess capots is to aggressively pay down existing debts, why do corporations do that?
Many of these same companies floated bonds for their buybacks!
It's all about incentives. Corporations are incentivized to run their operations on cheap capital.
if the company is going to depend on the public teet, it should bite when it isn't hungry.
That's just how things work right now.
Same would go with "lower prices and higher salaries"... the result in the article happens just the same.
https://www.bloomberg.com/opinion/articles/2020-03-17/the-go...
I'm not sure you really understand this. If they sold their shares to the company, they'd owe capital gains tax. For the remainder of shareholders that didn't sell, then they are not "much, much more wealthy" given the current stock price. So in one sentence, you have two wildly incorrect statements.
That doesn't take away from the fact that income maintenance is a good thing in a crisis like this. However, this type of public benefit is best provided by the government, not private corporations.
The real question is shouldn't they be using some of that 7.5bn to pay their fucking staff. Priorities are all wrong.
if you forsee a bad year, yeah, i think you probably lay them off under those conditions.
https://en.m.wikipedia.org/wiki/Balance_sheet_recession
It’s different but feels like a class of phenomena the private sector take part in.
That, and the submitter's account looks like some weird advert.
And I'm sure people with storage are buying up the cheap fuel.
Virgin Atlantic, however, continues to press, and has written to MPs pointing out that it provides the only British-flagged competition to British Airways on many key routes from Heathrow.
Virgin is owned by Americans (Delta), Air France and a shady billionaire who pays no tax in the UK. Why would the British taxpayer be on the hook here?
Also why isn’t BA asking the Spanish government for a bailout? Since it is owned by Iberia...
BA got 55% of IAG and Iberia 45% when IAG was incorporated as part of the fusion (http://news.bbc.co.uk/2/hi/8356780.stm).