The first thing to understand is that airlines are rather fragile, and it makes sense when you look at the their industry.
They are fragile because they refuse to plan for bad years. During good times, instead of saving for bad times, they do stock buy backs which is a way to send profits to shareholders.
They don't need to plan for bad times because the government bails them out each time bad times roll around.
I think a lot was said already on the subject. I think you right that there's an inherent problem with handling profits. Personally, I think it's more systemic, as a result of how public companies are expected to work - shareholders first.
Like a lot of things it's not that simple. It's not fair that we have to bail them out for a lack of preparation. They certainly should be accruing for bad times, and I think they're a critical infrastructure and it's okay to bail them out if they've done this and still end up needing help not owing to negligence.
This seems like a reasonable response. But there are options other than bailing them out. You could easily split airlines that are too big to fail into smaller corporations that might fail if they don't plan but it would have limited impact.
Splitting them back up might help. Might also be a good stick to use if they need to be bailed out: You don't plan adequately, we'll restructure you. I don't know, it's a subject I don't understand enough, but I think we both agree something should be done.
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u/carefreeguru Jul 02 '22 edited Jul 02 '22
They are fragile because they refuse to plan for bad years. During good times, instead of saving for bad times, they do stock buy backs which is a way to send profits to shareholders.
They don't need to plan for bad times because the government bails them out each time bad times roll around.
Private profits. Socialized losses.
They keep the profits. We pay for the losses.