Government Bailout of UAL and USAir

[Bally]

Why does the Govenment gives loan Guarantees to failing airlines, and who is the airline stabalization board. Are these elected folks and what is their mission? Is the Government afraid that if a major goes Chapter 7, it would pose a threat to the United States? Are the guarantees somewho related to the impact of 911?

Is it fair to airlines that are hanigng in there or making money for the Government to guarantee 1.6B loan to UAL and ease the payment schedule for USAir?

As a tax payer and employee of an airline that is competing with UAL and USAir, why should my tax dollars go to the competition? Perhaps I do not see the whole picture.

It seems to me that there is too much supply. Would'nt the fairlure of an airline shift the supply curve and be benificial to the industry as a whole?

 

[GogglesPisano]

For political reasons.
A group formed after 9-11 to help "stabilize" airlines crippled by the terrorist attacks which could not get financing to stay in business.
No.
See previous.
Not really.
Not sure (non-sequitor)
No.
Your tax dollars shouldn't, 9-11 was 2.5 years ago.
Yes.

 

[storminpilot]

For political reasons.
A group formed after 9-11 to help "stabilize" airlines crippled by the terrorist attacks which could not get financing to stay in business.
No.
See previous.
Not really.
Not sure (non-sequitor)
No.
Your tax dollars shouldn't, 9-11 was 2.5 years ago.
Yes.

Remember it is an election year. No one wants to be viewed as not helping their "voters".

 

[Parethd70]

It's not your tax moneyyy

These loans are only backed by the gov't....like a co-signer on a car loan. If Airways goes tits up, the gov't covers the loss for whatever bank holds the note. If Airways makes it, then the gov't profits on the deal. It's simply a business deal...risk/return.

 

[Mugs]

Why does the Govenment gives loan Guarantees to failing airlines, and who is the airline stabalization board. Are these elected folks and what is their mission? Is the Government afraid that if a major goes Chapter 7, it would pose a threat to the United States? Are the guarantees somewho related to the impact of 911?

Is it fair to airlines that are hanigng in there or making money for the Government to guarantee 1.6B loan to UAL and ease the payment schedule for USAir?

As a tax payer and employee of an airline that is competing with UAL and USAir, why should my tax dollars go to the competition? Perhaps I do not see the whole picture.

It seems to me that there is too much supply. Would'nt the fairlure of an airline shift the supply curve and be benificial to the industry as a whole?

Here is a better idea for you then. Allow UAL and USAir to fail, then you can compete with Airbus and or Boeing equipment freshly repainted with Mesa on the tail. Is that what you would prefer to compete with? What the heck, you might not pay as much tax overall trying to keep up with the great race to the bottom.

 

[Snoopy58]

It's simply a business deal...risk/return.

If it was a WORTHWHILE business deal with reasonable risk/reward tradeoffs, then you wouldn't need the government to be guaranteeing the loans.

It's not always pretty or kind, but the marketplace IS efficient, and you do NOT get better overall results by allowing companies that would otherwise fail to stay in business. The more artificialities in the system, the less efficient it is, and the worse for everyone.

As for the jets going to Mesa, well, if they haven't already bought up some of the jets already in the desert, I have to doubt that they're nearly as serious about getting larger aircraft as some here would fear. If they ARE sufficiently serious, then they'll find cheap jets someplace, regardless.

None of which, in any event, is a good reason for the government to assume the risk, with taxpayer $, of supporting an airline that can't find any investors willing to back them with their own money. If no investors like what they see, there's a good reason for that!

 

[Andy]

If it was a WORTHWHILE business deal with reasonable risk/reward tradeoffs, then you wouldn't need the government to be guaranteeing the loans.

None of which, in any event, is a good reason for the government to assume the risk, with taxpayer $, of supporting an airline that can't find any investors willing to back them with their own money. If no investors like what they see, there's a good reason for that!

You fail to factor in the lost tax revenues for the government, along with additional persons on the welfare rolls. Correct business decisions made by the government aren't necessarily the same as those made by private business.
I didn't even touch on the various government contracts held by UAL and UAIR. Right now, there is a shortage of contract lift for troops rotating in & out of SWA (military lift is maxed out and falls far short of requirements). UAL supplies a good portion of the contract lift to rotate troops (I know this firsthand due to my current position in the AF reserve). Do you think that it is in the government's best interest to see a carrier that supplies more than 20% of contract lift go out of business?
This is a far more complex issue than merely risk/return for loan guarantees.

 

[OakRBust]

Snoopy

Ask the nearly 100,000 taxpayers that work for U or UAL and I bet they would have a different outlook.

As you are entitled to your opinion... I am sure that every UAL or U employee is just about tired of hearing everyone non U or UAL wish them to death on this board (and most of the time for their own personal gain.)

I feel very fortunate that I landed where I did. I wish everyone else the best of luck.

See Yaaaaa

OAK