Airlines, suffering from lack of passengers due to coronavirus fears, say they need a bailout — that they deserve a bailout, are worthy of a bailout because, by gosh, they’re the airlines and they bring people here, and carry people there, and shuttle VIPs and freight and products here and there and everywhere and, well, they’re just too big to fail. If the airlines fail, we’re to believe, America’s entire economy will fail, as well.
What a dishonest, destructive message to the American people — to America’s free markets. On bailouts, just say no.
That’s what should’ve been said to then Presidents George W. Bush and Barack Obama years ago.
With Bush, it was the Emergency Economic Stabilization Act of 2008, bailing out the banks — bailing out the banks in large part for their easy-peasy loan terms so that unqualified buyers could purchase overvalued homes. Cha-ching: $700 billion, poof. And don’t forget TARP, let’s not forget the Troubled Asset Relief Program, passed under Bush and carried to full effect by Obama. Cha-ching. Another $350 billion in 2009.
And what did it all get the American people?
Here’s a taste of what ensued: “On June 1, 2009, GM filed for Chapter 11 bankruptcy protection. As part of the restructuring, the U.S. government agreed to provide the company up to $30.1 billion more. In exchange, the U.S. received a 60.8 percent stake in the company when it emerged from bankruptcy protection about a month later,” Pro Publica reported.
GM’s equity went to Canada, to Ontario, to a United Auto Workers’ retirement fund — and a little bit to the payback of “government,” i.e. taxpayer, bailout. Net outstanding, though, to this day is, ba dum da dum, drumroll please: $11.3 billion.
The special interests will tout these bailouts as successes.
But they weren’t. Not really.
They were bungled boondoggles floated on fear that led America down a dangerous anti-free market path.
“The bailout deceptions came early, late and in between,” Rolling Stone reported in 2015. “There were lies told in the first moments of their inception, and others still being told. … The lies, in fact, were the most important mechanisms of the bailout.”
And we’re about to make the same mistakes again.
“The Trump administration has proposed $50 billion of emergency aid for airlines ravaged by widespread cancellations amid the coronavirus pandemic,” Business Insider reported.
“Boeing Seeks $60 Billion Bailout For U.S. Aerospace,” Forbes reported.
Another bailout? Make it stop.
In fiscal 2018, Boeing’s Executive Vice President and general counsel J. Michael Luttig earned about $7.8 million; Chairman and President Dennis Muilenburg, about $23 million; CFO Gregory Smith, almost $8.7 million; Executive Vice President of Defense, Space and Security Leanne Caret, nearly $11 million; and Chief Technology Officer Gregory Hyslop, about $8.6 million.
Airline top dogs do well, also. That’d be fine and dandy — who cares what they earn? — except for the fact that now, with calls for taxpayer bailouts, they open the doors to scrutiny and criticisms. You sow what you reap.
In terms of straight salary, airline CEOs, on average, make more than $1 million a year. But that’s just a taste of their compensation. In 2011, The Associated Press found the average comp package for U.S. airline chiefs hovered around $3.5 million.
“[I]n 2008, one airline CEO saw his total salary exceed $17.4 million. In 2009, the top-10 U.S. airlines paid CEO salaries that ranged from $1.4 million to $8.4 million annually. The major U.S. airlines paid CEO salaries in 2011 that ran from $707,000 to more than $8.8 million annually,” Chron reported.
That was then. It’s more, now.
In 2018, United Airlines CEO Oscar Munoz earned more than $10 million. United’s President Scott Kirby that year earned about $5.5 million. Southwest Airlines CEO Gary Kelly, that same year, had a compensation package of more than $7.6 million.
This, as passengers saw their leg spaces crunched, their seat widths crushed, their measly peanut packets grow even measlier. This, as fliers saw their dignities stripped at the search points, their travel experiences degraded to cattle cart-like.
“We cannot afford to wait long for assistance,” Airlines for America, the trade association for the industry, said in a statement.
This, as the nation’s largest airlines, Delta, United, Southwest, have reportedly spent 96% of their on-hand cash in recent years on stock buybacks that have driven the prices of shares even higher. How has that benefited the passengers the plane execs are crying so loudly, amid the coronavirus outbreak, they’re concerned about now?
But it sure has padded the pockets of shareholders.
That right there is the problem.
These airline and plane manufacturing companies could’ve set aside their cash reserves for a rainy day. They could’ve heeded caveats that transcend time — a penny saved is a penny earned.
They could’ve behaved like the capitalists they are — instead of like the socialists they’re mimicking.
Bailouts are not American.
Bailouts are not free market.
America’s government shouldn’t be in the business of basically nationalizing private businesses by selling the fear they’re too big to fail.
Rather: Let ’em fail. And let ’em fail big.
Let the free market and competition will prevail. Airline executives, panicked over the coronavirus outbreak, say they’re forgoing their salaries to help keep their businesses afloat. Well, they should. That’s called entrepreneurial spirit, and it’s the stuff of America’s greatness. But sacrificing salary while demanding handouts from taxpayers is hardly honest.
On bailouts for airlines — on bailouts for any company in America, no matter how big, no matter how large the payroll — the answer should be a resounding no. Bailouts to businesses are just another way of messaging that the business has failed.
And in America, businesses that fail — fail. That’s the free market way.
• Cheryl Chumley can be reached at [email protected] or on Twitter, @ckchumley. Listen to her podcast “Bold and Blunt” by clicking HERE. And never miss her column; subscribe to her newsletter by clicking HERE.
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