Why bailouts make sense under these circumstances

By Scott Hamilton

Commentary

By Scott Hamilton

March 18, 2020, © Leeham News: The Federal government is preparing a bailout, said to be more than $1 trillion, to pump into the US economy.

Airlines want $50bn. Boeing wants $60bn for the aerospace industry. It’s unclear how much is for Boeing and how much is for industry.

Opposition for the airlines and Boeing was quick to emerge. The objection: how much each spent in recent years on shareholder buybacks.

The bailout package goes across the US economy and includes direct cash grants to individuals. In keeping with LNA’s business, I focus in the column only on aviation.

Boeing

In principle, I don’t have an issue with the theory of the Boeing request. The threat to Boeing from what’s happening to the airlines is real. We’ve written several stories about this in the last 10 days. What’s a threat to Boeing is a threat to suppliers across the country and a threat to the economy.

I certainly get the objections based on billions of dollars spent on stock buybacks and dividends paid to shareholders. I’m not a big fan of overdoing either. I believe investing in the company and its employees should get its fair share. I don’t believe it has. People can go back and point to this and complain, but you can’t un-ring that bell. That was then and this is now.

What I do object to in the here and now is Boeing borrowing billions of dollars and using proceeds to pay dividends in the name of shareholder value. I object to CEO David Calhoun taking a salary in the crisis that was Boeing’s own making (the MAX).

It’s unconscionable

I tweeted this week:

This is unconscionable that Boeing seeks a government bailout while shareholders get dividends and CEO keeps salary. Workers will lose jobs, pay, but God forbid the shareholders lose dividends or Calhoun sacrifices.

And

Executives make millions. These can all afford to cut salaries they will be asking rank and file, middle management to sacrifice while seeking taxpayer largess.

So it’s my view that any government assistance should be conditioned on Calhoun zeroing out his salary. Other top execs with multi-million dollar paychecks should see dramatic reductions. And the Board of Directors, who get paid about $345,000/yr (if I remember this number right) in compensation zero out as well. Half the Board (including Calhoun) was there at the creation of the MAX. Most of the rest approved policies that contributed to the MAX crisis, especially with respect to shareholder value. None of these should continue to be rewarded at taxpayer expense.

Airlines

The same principle applies to bailing out airlines. LNA analyzed the cash/days left position of the US carriers publishing financials. As I noted above, people can go back and point to shareholder buybacks and complain, but you can’t un-ring that bell. That was then and this is now.

Those who object to bailing out Boeing (and the aerospace industry) or the airlines take an incredibly myopic position. The hundreds of thousands of jobs at risk of doing nothing is catastrophic. For every direct job at Boeing, there are three or four indirect jobs in Washington State alone that are at risk.

Airlines for America reports that there are 750,000 employed by US airlines, including cargo carriers, across the globe. A4A claims there are 10 million US jobs supported by the airline industry. A4A details how here.

Airlines here and across the globe either suspended service entirely or dramatically reduced it. Over last weekend, word leaked out the Administration was considering grounding US airlines. There was no information about the duration, but hints of 2-4 weeks leaked out.

So far, this hasn’t happened. But word is that the idea is not off the table.

Terms and Conditions

I was around in 2001 when the 9/11 terror attacks happened. The Federal government ordered every flight grounded even as the attacks unfolded. The air transportation system remained ground for two or three more days.

Passenger demand thereafter was depressed for the next two years.

Today’s events surpass 9/11 in scope and impact. This argues for support for Boeing, the aerospace industry and the airlines.

The government provided direct financial aid to the airlines after 9/11. The Air Transportation Stabilization Board (ATSB) was created to disperse or guarantee up to $10bn. This is described here.

In the end, the ATSB only dispersed $2bn. It effectively chose airlines to survive and airlines that weren’t worthy of survival. There were a lot more airlines then than there are now. Industry consolidation means fewer choices.

Terms and conditions of the ATSB included but were not limited to the government getting stock or warrants. This should be a part of any package today. Interest was charged on loans.

Any dividends that might be paid should go to the government (taxpayers), not the common shareholders, until the tax dollars are repaid.

Forget the rich compensation packages Boards award executives until the companies recover. The CEOs of Alaska, Delta and United airlines already zeroed out their salaries. (David Calhoun, take note.) The CEO of Southwest took a 10% pay cut. Other executives earning more than $1m and receiving millions in stock grants certainly can afford a pay cut.

Board compensation should be trimmed to zero.

Protections for employees should be included.

Coronavirus is a crisis of unprecedented proportions. Millions of jobs and entire industries are at stake. Did I mention that people can go back and point to shareholder buybacks and complain, but you can’t un-ring that bell? That was then and this is now.

82 Comments on “Why bailouts make sense under these circumstances

    • Its in investment in and for a future.

      I agree absolutely with Scott other than verbiage.

      Its not about Boeing, its about the economy, which is about people and jobs and the business that crated all that and avoiding a depressions which is worse.

      In fact I would go further and its time to do the investment in the infrastructure that supports the entire US economy.

      Not just a prop up (pun intended) but a mechanism where the entire economy starts planning and investing for the gear up.

      • And some segments of congress are taking seriously the requirement to correct the offensive Corporate practices.

        You want help, it has a price.

        As the corporations have told us for so long, there is no free lunch.

        Without the American People, you do not exist and come with your hand out and these are the terms.

      • The US government could have told them they had to auction new stock and the highest bidder gets them, hence for some time the US Government would be the biggest shareholder for a “rock bottom price” and start to sell off as the stock recovers, but that would upset present shareholders that would not had the cash to pick up the new shares. So the US Government “In blanco” loans saves the present shareholdres power over the Company. That way the present share holders need the divident to calm their borrowers that they would not default on their stock financing and that the dividents will cover their loan payments. If the government would have picked up a big chunk of voting shares and stopped dividents they could have made even more Money as the underfinanced share owners needed to sell off.
        US Investor with huge loans are the biggest financiers/sponsors of US politicians…

      • Transworld, that’s collectivism, which doesn’t feed people.

        It is the wrong reward direction.

        Let the less capable companies fail, their pieces will be picked up by others who will make better use of them – if there truly is a market for their product or service the new owners will utilize the assets and good people well.
        That’s what is better for ‘the economy’.

        (Beware that everyone claims their industry is the engine/lubricant/blahblah of the economy.)

  1. I completely echo the views espoused in this piece (except the part where ‘principle’ is spelled as ‘principal’). In fact, airlines aren’t simply a high portion of GDP – they are also a key lubricant of the economy because they enable churn along its various value chains by facilitating key business meetings and the transport of key goods.

      • Scott: Relax, just go with the flow, some of that good grass might help, and better than hard drink in these times.

      • Scott, Are you suggesting that, up in Seattle, Microsoft might be hiring out of work, former software programmer’s from Boeing, that have a lack “principle” in their programming efforts? (grin)

      • I figure that is why we were given brains, to sort things out.

        I mean really, do you think the cavemen got catered dinner?

        Most of the time we can sort stuff out (now my mistakes no, but Scott, Bjorn etc? yes)

        Or as I told my typing teach yo many years ago, you done good, you got me up to 38 mistakes a minute!

        Granted I was shocked when she gave me the first IBM Selectric and then a while latter got a odd frown and asked me (or all people) why did I waste this on you?

        ME? Not a clue Mrs. Hett, give it to Debbie who does 98 on that mechanical , she will do 150 on this. All it does is make my mistake quicker.

  2. Making Executives and BoardMembers forfeit their compensation as a condition of a bailout is emotionally satisfying but does not go far enough. Shareholders must give up some value in exchange for a bailout as well. Otherwise they will have benefited twice, one due to a “shareholder value policy” and then again via the bailout. I don’t know what mechanism can be used.

    • There is a rather simple solution: The companies that seek a bailout would do this by issuing new shares.

    • I agree. Shareholders are the real owners of BA & other companies. They must put money, not the society.

      • Come up with a new type of Bankruptcy?

        GB: Government Bankruptcy – all supplier paid per normal, shareholders loose all, executives get no salary to start all pensions stay in place.

    • @jbeeko,

      Agree 100%

      Billionaire Mark Cuban & one of the country’s foremost legal experts, NY Times columnist & renown Columbia University Professor, Tim Wu, have both presented sound arguments for what Boeing & our airlines MUST agree to in exchange for taxpayer/government bailouts.

      Specifically, Mark Cuban states that all companies that receive taxpayer/government funded bailout MUST agree to permanently eliminate stock buybacks.

      While renown anti-trust legal expert, Tim Wu, summarizes several examples of the abuses that have emerged since the airline industry became an oligopoly last decade, that along with the terms Mark Cuban is calling for (permanent elimination of stock buybacks in exchange for taxpayer/government bailouts), requires airlines to make significant changes to their (deceptive & fraudulent) selling practices, and their oligopolist driven business models, including reduction/elimination of ancillary fees (that to me have become grotesquely excessive & increasingly are used/abused to fund ever larger than the already obscenely generous stock buybacks), as well as elimination of aircraft densification.

      Speaking of densification, it should be obvious to all, but just in case some may need a refresher course, in the current, and post, Covid19 era, when yet unknown communicable pathogens surely will emerge, further aircraft densification not only is unsustainable and wholly unacceptable, it’s dangerous and must be reversed to mitigate the dangerous & unhealthy overcrowding of too small/narrow seats densely packed into 30-31” pitch rows.

      Passengers’ health & wellness must NOT be deemed secondary in importance to funding obscenely generous stock buybacks anymore.

      With transmission of communicable diseases of any kind enhanced & better facilitated the closer people are in proximity to each other, the packing in of everything more & smaller seats per row on widebody aircraft where passengers are expected to remain in place for exceptionally long periods of time, with the spacing of those rows also significantly reduced by several inches per row is not just unwise & unsustainable, it’s dangerous, a threat to health & wellness, and must cease & desist in exchange for receipt of taxpayer/government bailouts.

      Period. No exceptions.

      In any event, I’d like to think most agree that companies that squandered countless billions with profligate spending on stock buybacks cannot, and must not, be rewarded for bad decisions that now require taxpayers’ to bail them out for.

      For example, Bloomberg News posted an analysis yesterday that concluded that of the airlines it studied, 96% of their free cash flow was wasted on stock buybacks.

      Ergo, taxpayers CANNOT & MUST NOT be expected to reward such bad decisions without those who now demand a taxpayer/government funded bailout (aka Corporate Welfare/Socialism) being obligated to make necessary changes that will not leave taxpayers in the lurch to such a degree in the future.

      These companies & their boards essentially looted these companies (in Boeing’s case some might argue/allege also was a factor that contributed in a poorly designed & defective product that cost 346 lives); they must NOT be able to continue operating the same way going forward after the current Covid19 crisis passes as it certainly will NOT be the last crisis be it medical or some other man-made induced (recessions, depressions, wars, terror attacks, etc.) these industries will face.

      Period. No exceptions!

      They wasted countless billions on stock buybacks; they most certainly are NOT entitled to exploit a pandemic to get off Scott free for naked greed that resulted in years of bad decision making that now forces them to turn to taxpayers hat in hand.

      In NYC we have a word for that: “Chutzpah!”

      For those who may be unfamiliar with that word, this is the example commonly used to explain what Chutzpah means:

      “A child who murders their parents and then cries/seeks sympathy for becoming an orphan”.

      Or unmitigated gall, if one prefers.

      How dare they?

      Enough is enough.

      [I’ll post a link to Tim Wu’s NY Times column, the Bloomberg News analysis & possibly others separately later today as time permits & after posting this reader column to better ensure the inclusion of a link does not get trapped in purgatory before being approved for posting].

      • I would not mix up passenger cabin density vs the making on share buy back illegal now and then in the future with legislation.

        As spacing of 6 feet is impossible to achieve on an aircraft, the issue is separate as a consumer protection which is a separate issue but may gain prominence suddenly.

        How dare they? Because they can and have gotten away with it but that is a societal and it accompanying issue of politics and courts that have agendas having nothing to do with the laws.

        Its We The People, not We the Corporations though that is what it currently is much like Dred Scott decision and as reactionary.

        • Obviously, 6 feet spacing between seats/passengers from nose to tail is impossible.

          However, just because the parameters of “social distancing” in its strictest definition cannot be met, that should NOT be viewed as an excuse for allowing the packing in an extra seat, and therefore, significantly narrower seat per row, as done with 10 abreast 777s & 9 abreast 787s, along with the much narrower aisles aboard those (hideously uncomfortable) aircraft to remain “normalized” in the current, and post, Covid19 era.

          We should be making every effort to mitigate the spread of communicable diseases aboard aircraft going forward, so cramming 10 seats per row into aircraft that for decades operated perfectly fine with 9 as done with 777s, or stuffing 9 seats per row aboard a model the manufacturer said was designed for 8 per row (787s) simply is no longer acceptable – especially given the 5-15 (or more) hours these aircraft models are typically flown.

          Further, economy class flyers must NOT be expected to be put in harms’ way by the seat shrinkage & row pitch reductions that are required to accommodate the massive space consumed required for the “all aisle access”, space hogging, McMansions in the sky that are those closed door “private suites,” which now sees 50% of most single decked widebodies allocated for 15% of passengers, with the remaining 85% crammed cheek by jowl into 17” wide seats, 30-31” pitch rows, who are also forced to navigate aisles so narrow that each & every time I’ve flown these atrocious, densified beasts, that at all of 5’8” in height and a 33” waist (according to the fashion industry, that is!) I yet still CANNOT pass through those pathetically narrow aisles: a.) without pivoting my body at an angle & shimmying; and even worse b.) managing to shimmy through those hideously narrow aisles without either risking tripping & falling because of the obstacle course posed by aisles cluttered with outstretched limbs (feet, legs, arms); torsos/shoulders leaning out from the confines of those teeny-tiny, 5th grader sized kiddie seats like the Leaning Tower of Pisa; or dodging the many drooping heads – yes! heads! – while bobbing and weaving like a drunk attempting to dodge all of those body parts strewn about the aisles from seats on both sides of the aisles during long haul flights!

          In fact, on all of my long haul flights aboard those hideous, densified beasts, to South Africa & Asia in recent years, NOT ONCE was I able to pass through those exceptionally narrow aisles without making contact with other passengers’ limbs – even after packing a small flashlight after my first flight from London to Johannesburg where in near total darkness it was impossible to avoid kicking several people on their feet and shins when I wasn’t crashing into their upper limbs, torsos, shoulders, or even smacking into an occasional head.

          Now apart from the obvious discomfort, and frankly embarrassment I felt that was caused every time unintended, not to mention unwanted, contact was made with other passengers, in an era of transmissible diseases simply by physical contact, we simply cannot allow this type of densification to continue.

          It long ago was dangerous and unacceptable in terms of pain and discomfort (possibly even DVT) demanding adults be crammed into seats as impractical for long haul travel as the desks and chairs found in a pre-K classroom are.

          But now, when we must be thinking in terms of mitigating transmission of communicable diseases simply by touch, we cannot tolerate seats so small and narrow that physical contact, no matter how much one tries to avoid it, is unavoidable.

          Case in point: a recent 6+ hours flight aboard a narrowbody Boeing 757 in a window seat where even with my modest size and build, it was utterly impossible to literally avoid rubbing shoulders with the very petite female passenger seated beside me without me making an effort to lean away from her and against the sidewall of the aircraft.

          These 17” seat widths already are NOT acceptable for mid and long haul flights as it is when modestly sized passengers cannot escape physical contact.

          In the current, and post Covid19 era, these configurations become that much more unacceptable, or even dangerous.

          Simply put, with most 757s leaving fleets soon, except for 737s, which for better, but really worse, we’re stuck with for another generation, teeny tiny seats packed in 30-31” pitch rows have NO PLACE aboard all other mainline aircraft models.

          The minimums rightfully must be 18” width and not less than 32”-33” pitch for rows for all other mainline aircraft.

          If that means the end of 1-2-1 cabins in the pointy end, so be it.

          Why should just 4 seats per row at 60” (or more pitch) instead of at least 6 seats per row force others to squeeze into seats even a pipsqueak such as myself cannot even fit in just so precious, spoiled, over-entitled, pampered divas may hide inside their space hogging cocoons?

          If the want all aisle access, let them pay extra for the “2” seats in the middle of the 2-2-2 row to avoid the hardship of stepping over another passenger (or fearing the humiliation of passing gas while they’re sleeping and having to face/talk to the person beside them!).

          That, or use aircraft better suited to spacious, all aisle access, private suites like a Boeing 747-8 (hey, A380s are still way too big even tricked out Emirates’ or Singapore Airlines’ style).

          And finally, since our profligate airlines are turning to taxpayers for a bailout after squandering 96% of their free cash flow on obscenely generous stock buybacks, you bet they better agree to giving back many things in return for relying on taxpayers.

          Otherwise, perhaps they should turn to Wall Street to sell stock to raise the cash they need instead.

          But, for sure, the era of greed, arrogance, abuse or even outright contempt and hostility towards passengers, especially Economy class passengers that airlines attempted to normalize in an era of excessive industry consolidation (aka cartel/oligopoly) prior to the onset of the Covid19 pandemic is over if airlines expect even a single penny from taxpayers.

          Otherwise, they can get a taste of their own medicine and GO POUND SAND.

          Oh, and FOR SURE, the era of stock buybacks for airlines (and McBoeing) must also come to an end if they take taxpayer funded bailouts.

          Our airlines’ (& McBoeing’s) greed and arrogance with their obscenely generous stock buybacks CANNOT, and MUST NOT, be rewarded.

          I uploaded a reader comment post earlier today, but as of this writing, it hadn’t cleared the moderator yet.

          Once that post is cleared, the examples of JetBlue and McBoeing, and their abuses of stock buybacks should make clear why this toxic cancer for airlines and McBoeing must come to a permanent end of they take even 1-penny of taxpayer funded CORPORATE SOCIALISM/WELFARE – er bailout.

          Enough is enough.

          Period.

          And yes, if taxpayers’ are bailing these companies out, you bet they better agree to Terms and Conditions that benefits those who are footing the bill.

          Beggars, after all, can’t be choosy.

          Especially those who fleeced flyers with “stock buyback tax” for so many years.

          96% of free cash flow spent on stock buybacks.

          How dare they?!?!

          Yeah, **THOSE DAYS ARE OVER!**

          Frankly, that’s long overdue.

          Cheers!

          • Feel free to condense your thoughts next time.

          • You loose so much in translation with the abridge version though.

            On the other hand C-19 and buy backs vs a separate issue?

        • The danger area for Covid-19 seems to be 3 feet, 6 feet is a safe distance. While it might be upsetting to some, reducing the risk of transmission by increasing space might just be the cost of doing business in the future. We are running at one epidemic every 5 years on this overcrowed planet of ours.

          • A sneeze can remain infectious for 3m/10ft though this distance you give I assume is safe for breathing. The virus dies of rapidly at temperatures above 26C. It will service on stainless steel surfaces for 12 hours and clothing for 6 hours. Normal detergent kills it. 650,000 people die from flu every year on overage, COVID-19 has about 20 times the death rate. If you smoke, quit now. The virus manifests as a sore throat, fever. If you start of with a runny nose then you have a clue. The runny nose comes later, it feels like you are drowning.

          • Yes, there will come similar infections every 3-15 years as population growth and density increases.
            The traditional solution is private owned housing on your owned land with massive bank loans, roads and an honset police corps. If you miss bank payments the house is not yours anymore and the bank has sold it to another family. That makes people worry of work and payments and not having babies increasing cost to risk their house. So IKEA stores and low VAT on hand Tools helps this system work.

      • Howard, totally agree with your comment and concepts cited in Stopping this Abusive behavior of the BOEINGS’ and Airlines in depleting the Vaults of their own companies, all in the name of Profits. Well surprised by the COVID-19, and though on the honest public investments in these putrified Stocks.

    • These are the links referenced in my earlier post:

      Tim Wu’s NY Times column, “Don’t Feel Sorry For The Airlines”:

      https://www.nytimes.com/2020/03/16/opinion/airlines-bailout.html

      Bloomberg News Analysis re 96% Of Airlines’ Free Cash Flow (wasted) On Stock Buybacks:

      https://www-bloomberg-com.cdn.ampproject.org/c/s/www.bloomberg.com/amp/news/articles/2020-03-16/u-s-airlines-spent-96-of-free-cash-flow-on-buybacks-chart

      Mark Cuban re Terms & Conditions that must be REQUIRED in exchange for receipt of taxpayer/government funded bailouts:

      https://www.cnbc.com/amp/2020/03/18/mark-cuban-says-bailed-out-companies-should-never-be-allowed-to-buy-back-their-stocks-ever-again.html

      BONUS Analysis of Boeing’s $43 Billion (wasted) on Stock Buybacks:

      https://wolfstreet.com/2020/03/11/boeing-crashes-as-43-billion-in-past-share-buybacks-turn-into-existential-threat/

      Also feel free to view my extensive roster posts featuring introductory comments & analysis on my LinkedIn page, or tagged under “airlines”.

  3. Scott,
    I agree with much of what you say but the money that went into stock buybacks also reduced the cash that was available to pay dividends.
    I think a more fair way to do this is to reduce dividends to 50% of what they were until the government loans are repaid. Otherwise, the shareholders are getting shorted twice

    • @Bob: I view it as insane Boeing borrows $10bn and uses $6bn to pay dividends. That $10bn should have gone into the checking account.

      • Insane is a very polite way to put it. i might use stronger language.

        Change the rules so buybacks are an illegal from of stock manipulation. They used to be til Reagan gutted the rule.

        • @marku52,

          Hear! Hear!

          A very enthusiastic +1 for your comments overall, but especially for making stock buybacks illegal again.

          Let’s look at the outcomes in the two industries of interest for this publication, airlines & aerospace:

          1.) for airlines: a decades’ worth of competition killing mergers that resulted in excessive concentration (aka cartel/oligopoly) with service & other product degradations typical of industries that lack meaningful competition so great, the founder of Skift, a leading trade publication that covers airlines & hospitality industries, dubbed it “hate selling”.

          Imposition of an ever lengthening & ever increasing in cost of fees, fees & more fees with each passing year, plus cabin densifications that in an era of Covid19, and thereafter, is no longer acceptable & sustainable given the significantly increased risk to health posed by overcrowding/being trapped (confined) too close to others for long periods of time – with all of that done to juice up cash allocated/wasted on obscenely generous stock buybacks (96% of free cash flow for airlines analyzed by Bloomberg News as referenced in reader reply comments posted above), with JetBlue BORROWING $1 Billion because it lacked any free cash flow just last fall before spending $175 million on an “accelerated” stock buyback in late November.

          To wit, within days of those transactions, JetBlue announced further product degradations in the forms of:

          1.) formal introduction of (passenger loathed & hated/sham) Basic Economy Fares;

          2.) significantly increased checked bag fees;

          3.) higher restrictions/penalties & punishments for most fare categories overall.

          This, of course, is in addition to the many product degradations at that once “flyer friendly” airline that once prided itself on “Bringing Humanity Back To Flying” in the post David Neeleman/Dave Barger (Founder/Founding Executives), including the fudging of its own cabin densification where it originally claimed the currently underway mid-life cabin updates for its Airbus A320s would be “similar to the Core rows of the then newly arriving Mint configured A321s (ceos)” being introduced for trans-cons, which had 33” row pitch instead of the 32” they later “switched to (on the sly)” seen now on its updated A320s.

          That, plus those (I, personally REFUSE to use because they’re) waaaayyy too small Airbus “Space Flex” kiddie sized micro loos.

          All that & more is why passengers have been treated like dog crap & have been stuck footing the bill for these obscenely generous, badly abused, stock buybacks.

          In fact, if JetBlue’s brazen actions of BORROWING $1 BILLION, spending $175 million for the “first tranche” of an “accelerated” buyback (of $1+ BILLION authorized for the current period) & then sticking it to flyers with hefty fee increases, the “de facto” fare increase that virtually every expert views BE as being, plus its many other DEHUMANZING degradations in the post Neeleman/Barger era doesn’t make clear that the explosion/proliferation of excessive fees is little more than a “stock buyback tax” being imposed on flyers, than what will?

          I mean, seriously, in JetBlue’s case, flyers are not just now expected to pay a “Stock Buyback Tax” via its imposition of endless & ever increasing fees (plus other product degradations identical to/mimicking those found at other airlines) to fund its stock buybacks, they literally are now being asked to also pay for the INTEREST on the $1 BILLION loan the airline took when instead of foregoing a stock buyback because it lacked cash to do so, it BORROWED $1 BILLION.

          If that’s NOT naked greed, gluttony, avarice (etc.), and of course, the VERY DEFINITION of PROFLIGATE spending, then what is?

          Some may wonder why I have long used the term “obscenely generous” when describing these odious, and now even toxic, stock buybacks in my posts here in LNA and everywhere else my commentaries & analyses are found?

          To those I offer JetBlue & Boeing (see below) as a perfect pair of “Exhibit ‘A’s”.

          Speaking of Boeing, where does one even begin with a discussion of all the things gone wrong and rotten to the core now that it’s morphed into McDonnell Douglas 2.0 – or “McBoeing”.

          That list is soooo long it’s even too long for moi to fathom!

          So, here’s a very partial list for but a few of its many problems:

          – 737 MAX (still grounded a year later; lucky for McBoeing Covid19 takes the pressure off recertification what with half or more of the world’s fleet of commercial aircraft of all models grounded for 2-3 months minimum, and possibly much longer);

          – Crappy quality of 787s rolling off the line in South Carolina (hey, there’s even a VERY LOUD & frequently in the news “Whistleblower” airing all of the dirty laundry at the Mothership & at the non-unionized plant they rewarded the decidedly UNQUALIFIED former Governor Nikki Haley with a plum, not to mention, SUPER LUCRATIVE, Board seat as her “Xmas Bonus” for doing Boeing’s dirty work to keep unions at bay there);

          – The KC-46 tanker transport (the entire history of this program has been either rife with corruption, problem plagued, or both, and yet still how many years late & over budget is it? Oh, and it still ain’t ready for use…WOW!)

          – Starliner (Oopsie! Once in orbit, it lost its way and the mission had to be aborted)

          Oh, how the list of problems plaguing this once great company that revolutionized air travel not once, but twice, first with its 707 & then a decade later, it’s still magnificent & incomparable “Queen of the Skies”, the much beloved & iconic widebody 747 (aka the OG widebody that yet still is 2nd to none).

          So again, if one wonders why the toxic cancer that are stock buybacks MUST be made illegal again (and ABSOLUTELY MUST BE PERMANENTLY ELIMINATED AT ANY COMPANY THAT NOW SEEKS A TAXPAYER/GOVERNMENT FUNDED BAILOUT as Billionaire Businessperson Mark Cuban argues is eminently fair as Terms & Conditions to be bailed out), you need NOT look further than the examples, or “Exhibit ‘A’s”, of JetBlue & Boeing as provided here.

          Indeed, “I rest my case” 😉 !!!

          Cheers!

          • Lets through the high priced of tea in China into this as well.

      • @Scott

        I agree. Totally insane. In my point of view even a criminal, because it’s totally against well being of company itself and his creditors.

        I really wonder why someone could think it is normal that company in big troubles takes a 13 bln USD loans to give away 6 bln USD by financing dividends for shareholders. Totally sick.

      • The federal government should demand equity in exchange for an infusion. They should also swap out at least half of the board as a condition of the infusion. All the financial engineering at Boeing has led to a mess. Executives are clearly culpable and should pay a heavy price.

    • The shareholders get “shorted” even more if the airline has to go into Chapter 11.

    • Shares buy back exist and are massively used as a way to distribute cash to investors, in preference to dividends, as they are essentially tax free distribution to the receiver. Shares buy back support the rise of the stock and rise in the stock is not taxed until you sell your share and then only marginally taxed when you sell, if at all. Dividends in contrast go straight into taxable income. As all bail-outs are eventually paid by tax money, at least the companies that would have distributed money through dividends contribute to the tax pot.

      • @JCM,

        All the more reason why we MUST eliminate this badly abused, corruption riven, government sponsored, form of tax evasion.

        In fact, stock buybacks were ILLEGAL from 1934 until 1982, and as McBoeing/McDonnell Douglas 2.0, JetBlue (aka “Exhibit ‘A’s” cited above) and most of our airlines have shown all too well what with 96% of their free cash flow being wasted on stock buybacks (per the Bloomberg News analysis available at the link provided in another of my reader comments above), which according to an analysis by Zacks over past 5 years cumulatively totaled $30 BILLION for USA’s “Big 3” network airlines, American, Delta & United alone.

        Below are 2 links that make compelling cases as to why Stock Buybacks MUST be made ILLEGAL again (especially for companies that receive taxpayer/government funded bailout), just as they were for nearly 50 years to better prevent the exact types of abuses & wasteful stock buybacks seen at Boeing [perhaps THE Poster Child for everything that can go wrong with Stock Buybacks], JetBlue [which BORROWED money in part to fund its late November 2019 $175 million “accelerated stock buyback” – totally RIDICULOUS], and as many others (here’s looking at you American Airlines!) have shown, starting with a link to Yahoo! Finance, followed by another link to Forbes (aka “Capitalist Tool”) so those whose inclination is to see elimination of stock buybacks as a “leftist conspiracy” may take comfort that my long held POV for getting rid of the toxic cancer that are stock buybacks long preceded, and is **NOT** just on the “lefty wish list” of AOC, Elizabeth Warren or Bernie Sanders, but rather, is sound business practice that served our country well for nearly 50 years, and actually has many mainstream voices within the business community, including, of course, Billionaire Mark Cuban (also referenced, with link to CNBC article, in other reader comments above) also demanding an end to stock buybacks at companies that soon will receive taxpayer/government funded bailouts.

        Those 2 links are below:

        1.) Yahoo! Finance:

        https://finance.yahoo.com/news/7-reasons-stock-buybacks-illegal-172253787.html

        2.) Forbes:

        https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-should-be-required-to-vote-on-stock-buybacks/#691044696b1e

        Enough is enough.

        Please see my other reader comments posted above for more on this discussion about why Boeing or our airlines that accept even 1-cent as loans and/or direct cash disbursements, ABSOLUTELY MUST agree to permanent elimination of stock buybacks across the board, with McBoeing also undertaking a massive “housecleaning” of its upper management & Board of Directors (starting with Nikki Haley); and our airlines also agreeing to including passengers – aka those who literally pay the freight with airfares AND also will be bailing out entities that wasted countless tens of billions on stock buybacks – making flying human again throughout the industry by significantly improving their product quality, as renown expert, Tim Wu, calls for in his NY Times column that’s also available at a link posted above, and as I have long described here in the LNA universe & many places elsewhere (especially my LinkedIn page) as eminently fair, reasonable, and more than necessary & appropriate in exchange for being bailed out by taxpayers.

        Simply put, as the Jetblue example discussed above makes clear, the imposition of endless & increasingly exorbitant fees, as well as the Bloomberg News analysis (also available at a link posted in a separate reader comment above) where 96% of the free cash flow for the airlines it studied was diverted to what most sensible minds will agree is profligate spending on stock buybacks, along with the many other passenger hated and loathed product degradations that took place last decade as the industry progressively eliminated peer competitors and became excessively concentrated (btw, renown NY Times Columnist & Columbia University Professor, Tim Wu, is among the most accomplished anti-Trust experts & he also says our airlines have become an oligopoly!), these intentional fare and cabin degradations that funded obscenely generous stock buybacks are a naked greed grab with those fees & intentionally degraded cabins essentially becoming the methods to impose a “stock buyback tax” on beleaguered flyers who found themselves with fewer and fewer carriers to choose from between 2008-2014, and thereafter, as five major, peer/near peer airlines (Northwest, Continental, AirTran, US Airways and finally, Virgin America) were taken over, and eliminated, with an ugly, abusive, and toxic, a modern era Robber Barrons’ controlled, shareholders’ only matter cartel/oligopoly emerging as meaningful competition disappeared from our skies.

        The shameless greed and hypocrisy of the airline industry couldn’t be more obvious than now when facing a crisis, they’re turning to government for the same types of subsidies & outright cash infusions that they have long criticized others for despite their documented histories of profligate spending on share buybacks instead of paying down debt, better funding employees’ pension plans, and/or striving to offer products passengers WANT to fly instead of because they have few, if any, options to choose from and therefore must fly.

        So, yes, absolutely, if any company takes even so much as 1-cent of taxpayer backed loans and/or direct cash infusions (aka SUBSIDIES), in exchange they MUST agree to permanently eliminating stock buybacks, and yes, they must reverse those passenger despised, often sadistic, but certainly odious, aircraft cabin densifications featuring seats way too small & narrow for most adults to fit into; rows/pitch that are way too narrow for most adults to be seated with a modicum of comfort for more than 2-3 hours and/or to use their laptop computers inflight; and especially those hideously & preposterously small lavatories that passengers have literally gotten stuck inside of, and a pilot at a major airline described as the among the “worst experience” in his professional career, or of course, many Passengers with Reduced Mobility (PRM) cannot access at all.

        Enough is enough.

        And if the airlines refuse, then hey, they can feel free to sell as much stock as they need (even if it’s on the “Pink Sheets”) to replace every last cent wasted on stock buybacks and remain afloat instead.

        Isn’t that capitalism at its best anyway?

        I mean, they can’t have it both ways; an abusive oligopolist business model in times of plenty that’s largely dependent on an unfettered, and progressively escalating, screwing of passengers as much as they think they can get away with, while also expecting a taxpayer/government funded bailout when good times come to an end (for whatever reason) with “No Strings Attached” and without binding,
        definitive agreement stipulating the significant & necessary changes that the fare paying AND now also TAX PAYING funders find to be in THEIR best interest.

        Nothing for nothing – or meaningful changes for the better in exchange for being bailed out at taxpayer expense.

        It’s that simple.

        Take it, or leave it, airlines – and ESPECIALLY McBoeing:

        The modern day version of the early industrial era Robber Barrons (see, for example, Tim Wu’s comments about ending cross-ownership ownership of airlines in his NY Times column) and their Trust like, anti-competitive stranglehold over the airline industry that funded their seemingly endless buffet of wasteful, tax dodging, company looting, stock buyback, greed grabs, is SOOOO OVER now!

        That party’s over – and it ain’t coming back.

        Deal with it.

        Or, of course, feel free to go sell as much stock as you need to stay in business on the penny exchanges if you expect to go back to business models predicted on unfettered/unrestrained abuse and screwing of passengers featuring cramming them into too small seats for flights longer than 2-3 hours, packed in no legroom rows, aboard “densified” (translation: horrible and intentionally uncomfortable junk) aircraft with aisles so narrow they become hazardous obstacle courses on long haul flights, or of course, those preposterously small lavatories as was done in recent years simply out of greed, gluttony and of course, contempt and elitist arrogance for those for whom paying $2,000 for a family of 4 or 5 who were deemed as cheapskates unworthy of anything more than a boarding pass (if that, with a few sleazy airlines even charging for that, too) to get past security checkpoints and stepping through the left door of the aircraft unless they passed through the many toll booths these modern era Robber Barrons erected to collect a “stock buyback tax” allowing flyers the “luxury” of sitting together as a family; paid the now exceptionally high fees for the “luxury” of checking their bags – and so much more demanded of them to grease the skids for that 96% of free cash flow that was wasted on profligate stock buybacks at most – nearly all – of our airlines.

        The choice is yours.

        Cheers!

  4. As a person who was around for Lehman (and 9-11), people forget that after we let Bear Stearns collapse (moral hazard) the panic did not end, and then went to Lehman (moral hazard) and only ended with TARP. There were bank runs (WaMu, Wachovia), and unemployment spiked to 10%….if there was TARP before Lehman the damage to the broader economy would have been smaller. Yes recognize that it is not fair to save the fat cats, but it is a bit of cutting of your nose to spite your face – and frankly this is unprecedented. Moralize prospectively, but right now we have to save for today

    • I do remember and agree but we can also impose conditions.

      Keep in mind Boeing was hosed up before this all happened and in their arrogance still voted a dividend.

    • You must be mistaken: moral hazard is a concept that applies only to lazy, “work shy” individual human beings; it can never be employed in analysis of the actions of joint stock corporations or corporate employees paid more than $US250,000/year. Says so right in the University of Chicago business economics textbook.

      • Ok, spot on. Workers should stay in their proper cowering place while the CEO runs the company into rui9n.

        What were we thinking?

    • Washington Mutual sharholders deserved to lose their money, they let the company get out of control, it was granting mortgages without even checking that the property existed.

      (Beware the possibly-confused-with Washington Federal was a well run S&L, nothing to do with the incompetent outfit.)

      Wachovia was not well run.

      Through it all well run banks like BBandT, and smaller ones in the US Midwest, did fine. (BBandT avoided some financial things because they weren’t good for customers thus not good for the bank. Search its web site for the ‘culture’ document and find the key principles – look for a pyramind graphic.)

      Every big problem is called ‘unprecedented’ by those with something to gain from gummint coercion. “Too big to [let] fail.” is a con job.

      A problem with US and now Canadian copycat law is that the management that got the enterprise into trouble gets to keep runnin git. Formerly in Canada courts appointed someone else to run the company, usually an experienced accountant, termed the Receiver . Assets have to be protected – for example, when Points of Call went broke in Vancouver BC some spare parts were yanked back from their voyage somewhere overseas.

  5. 3 comments

    1) The scope and impact of Covid-19 does surpass 9/11 but the implication that demand will be suppressed least as long as the 2 years pay 9/11 doesn’t follow. The issue then was ongoing fear, whereas with Covid-19 the fear should be gone once a vaccine is in place, presumably in a year’s time. Things may well remain suppressed due to personal financial hardships, business practice changes etc. but they may also rise due to a desire to get out and enjoy after all of this. But 9/11 is not an especially useful reference for post event effects.

    2) airlines and manufacturing should not be treated the same. If Boeing or its suppliers go belly up crucial skills and relationships may be lost. Airlines in contrast are largely a commodity and if one fails, if passenger demand remains, replacement capacity will soon emerge, either from a pre existing competitor or a new entrant. Jobs will transfer. No irreplaceable knowledge or relationships will end.

    3) Any dividend restriction would need to be more nuanced, given a) that many pensions etc. are based in part on these and b) eliminating private dividends may increase business costs and by knock on mean higher end costs of the bailout.

    I must have missed an elephant in the room there. Didn’t realise you are on Twitter.

    • Some good points but if an airline goes belly up you have tens of thousand of unemployed and they don’t all share the same supplier so there is a ripple affect and that is part of the goal to minimize that.

      There is going to be a lot of people out of work for a long time already.

      And vaccinations we HOPE for one in a year, they may pull a miracle and get one sooner or it may be latter.

      And heats off to the Volunteers in Washington Sate who offed themselves up for the first trials .

    • 2) Not true when you get down the pipes of the system…. If American or Delta collapse, there will be repercussion for creditors; suppliers, pensions, employee seniority etc, can’t just repaint the planes, rebadge the employees and move over to say United….the stakeholder list is exponential and the lawyers will be heavily involved with each trying to get their maximum advantage…and when the lawyers get involved, things clam up and take time….this won’t be a pre-packaged bankruptcy like you saw in 2008/09 where creditors were onboard and many key items were discussed beforehand. This is will be disorganized and that will lead to its onward collapse of the industry with knock on effects to rental cars, hotels, uber etc. Recall in 2009, Ford supported the auto bailout for competitors GM/Chrysler because of fears over the mutual supply chain…so no, these aren’t commodities and the assumption of a seamless transition to a competitor (who would that be when they are all stressed) is not realistic

  6. I’m totally onboard the idea of shared pain, but don’t believe it has to be all or nothing. CEO and Board members base salaries could be cut dramatically, as could other high level execs if allowed by contracts. Executive bonuses based on performance will likely be small or eliminated. Dividends could be cut but not eliminated. There are some people who rely on them for a major portion of their income.

    • I will add; no stock buybacks, at least for a while. I don’t think that would happen anyway. May as well mandate it.

  7. Any “BAILS” handed out to the Aviation or other Corporate entities and reason for doing so must be made public and monthly Audits(By serious entities) published so the US Taxpayer is totally aware how all these “Extended Hands”, and certainly “Crybabies” are spending your $$$’s. Hope all of it is guaranteed by whatever disposable Assets remain these Companies May have, and also a payback timetable established(12 months Grace Period on initial payback).
    Scott, you did a great job in exhibiting and exposing the TRUTH👍

  8. Airlines and manufacturers are different cases. Shutting down the airlines means they incure a cost for the public good, seems acceptable to me that the public, the taxpayer, contribute to that good.

    Boeing is another case, their business case is long term and shouldn’t be greatly affected, more correct to say some income will just be deferred. Morally speaking, I find it hard to defend spending taxpayer funds on BA, US has just imposed duties on EU for doing the same thing with AB even though they make money out of it. I can already see EU action over thisone, not to mention smiles in China and Russia as the US helps justify COMAC & UA funding.

    A better solution is a clearly announced decision that aerospace manufactuers will not be bailed out. Acepting that BA is to big to fail it should be made clear to all that if necesary the gov. will take over BA, refund it, then sell it off at a later date. Saw somewhere that the Obama admin. made money out of the GM bailout. Bailing out robber barons sets a bad example, since the bank bailouts Boeing board have decided they can get away with anything and the gov. will jump to save them WHEN it goes wrong.

    • @MartinA
      “Accepting that BA is to big to fail it should be made clear to all that if necesary the gov. will take over BA, refund it, then sell it off at a later date.”

      Already happened, this was exactly what the UK government did when Rolls Royce got into serious financial difficulties when developing the RB211 engine in the early 70s.

      For RB211 just substitute MAX.

      • Apart from GM I might point out that Iceland took over all (failing) banks in the country during the GFC, re-funded them before selling them off again. Didn’t the UK gov get shares for helping out the banking sector then as well?

        These bailouts are not using our politician’s own money, it’s our money, morally speaking, we should get something for it, just like other shareholders.

        Realistically speaking, keeping failing companies running with gov cash never works long term, companies which escape reforming using subsidies and protection usually fail quickly anyway, just look at the Aussie car industry.

        • I think its our money morales or otherwise.

          But morales, governments and corporations don’t have anything in common.

          On the other hand taking an opportunity to make them when they come hat in hand does.

          • You politicians are about to come hat in hand, it’s that time of the olympiad again. Get writing.

    • Bailing out Boeing is fine.

      Bailing out/allowing the same managers & Board of Directors that rubber stamped their legion of bad decisions that long before Covid19 pandemic emerged, or of course prioritized the squandering of $43 billion on share buybacks, and/or excessive/ill-timed dividends to continue even after 737 MAX grounding to remain at McBoeing/McDonnell Douglas 2.0 (including Calhoun) is NOT ACCEPTABLE.

      All of these people MUST be shown the door – ASAP.

      They ran the company into the ground and have no right to expect continued employment (or plum Board seats that pays several hundred thousands per year) there.

      Whether it’s various divisions should be divested as some suggest is a matter Scott and Bjorn are far better suited to take up.

      However, with serious, long term, problems in many programs across its marquee divisions:

      – 737 MAX (seen pictured in the urban dictionary next to “Dumpster Fire” – and that’s before including that epic fail of its desperation attempt seeking to kill off Bombardier’s C-Series via instigating a trade-war w/Canada by slapping a 300% tariff on that badly undercapitalized company’s [then] poorly selling “FSA” that instead of killing the much smaller rival’s new single aisle model, pushed it into the welcoming arms of its [now bigger] rival, Airbus – for $1. But ah, I digress!);

      – FSA, NMA (well, if NMA wasn’t already dead before Covid19, at least if using conventional thinking, surely it must be now, even if a future of 10 hours aboard ANY narrowbody such as an Airbus A321XLR is a future I want NO PART of – at least behind the curtain…);

      – 787s built at South Carolina FAL (OK, so maybe it’s NOT the full-on crap show the 737 MAX is, but unhappy employees that work there [complete with vocal Whistleblower airing much dirty laundry] and airlines who received [poorly built] aircraft with quality control issues so great they actually said so publicly ain’t something to crow about either!);

      – Entire 787 program ($32 billion cost: but for accounting “Black Magic” would this program ever be “profitable”?);

      – KC-46 tanker transport (do I really need to say more about this long delayed, way over budget aircraft that the military says still isn’t “mission ready”? Nah, I didn’t think so. Again, maybe NOT quite the Dumpster Fire the 737 MAX program is, but that’s not saying much);

      – Starliner (poor dear lost its way and had to be called home on an expensive, public relations fail);

      So, clearly, it’s long past time for those who oversaw those epic fails, including Calhoun and most of his Board, to go.

      Obviously, nobody wants a crisis as awful as Covid19 to push a company to the brink.

      However, failing to rip the bandage off all that’s long been going wrong at McBoeing/McDonnell Douglas 2.0 and making EVERY EFFORT to right this listing ship now that there is a crisis as awful as Covid19 would be a terrible waste, too.

      Yes, Covid19 is as awful as can be – but that doesn’t mean this opportunity to fix Boeing should be looked back at in the future as a wasted opportunity, and yet another epic fail, that in the end results in the same outcome as the earlier version of McDonnell Douglas: it’s demise.

      Because if this opportunity to clean up all that’s long been wrong at McBoeing, and the rotten to the core corporate culture that took root there after the improbable success of McDonnell Douglas’s stealthy “reverse takeover” of Boeing in 1997 (with Boeing’s money, too! Go figure!) after McD failed, that will be a terrible shame, and truly, a wasted opportunity that likely never will – or at least one hopes never will – present itself again.

      Virtually everyone agrees much is wrong at McBoeing; now there’s a once-in-a-lifetime opportunity to undertake the radical surgery needed to right the ship.

      Why not make the most of this unique opportunity?

  9. Time for Buffet, Bezos and Gates to take Boeing private, today stock at $93 and market cap $52B billion (Boeing wants more aid their market cap) Get rid of old crony board of directors and executives Then three of them can do an IPO in a couple years after they turn it around

    • Buffet is only interested in well managed companies, with good products, and at a fair price, this is obviously not the case for Boeing…

  10. In long term shareholders are who shall give the money is needed to a company.

    In short term I agree that the country can pump in some money by bailout, but in exchange of something – issuing a new shares is a possibility – so in long term to put shareholders in accountability. Society shall not finance / give money, shall only help.

    No dividends at all, no share buybacks at all, no extra money for execs – until the bailout money won’t be returned.

    In case of Boeing, I agree with @Scott that Calhoun and board shall work for far less money.

    • “You can’t un-ring the bell”

      That’s certainly true. And let’s assume, you don’t want those companies to go under, because of the big effects it would have. Boeing (and others) claim, they can’t get the money from the capital market (possibly because smart investors don’t trust them). So, why not go for the simplest solution, and it doesn’t even need a lot of restrictions. Any company that needs money can issue shares. The government should buy those at a 10-20% discount of current values. Unlimited amounts.
      The companies get their cash, the tax payers get the reward if the companies turn around and the stock price goes up again. Share buy-back, dividends all flow back to tax-payers. The only ones to suffer will be current shareholders, as they should be. It was their risk to do business, and they should pay for that risk.

      • The future free cash flow once things return to normal , instead of buying shares, can go to paying off the taxpayers account.

        Thats probably how it could work…. some wags might like to call it
        ‘Reimbursable Production Aid’ with a nod to the Airbus Reimbursable Launch Aid and its loan guarantees (well before loans became so cheap)

  11. Welcome to the party friends.

    I am a 30 year (less two long layoffs) IAM represented employee.

    Since 1997 many of us have been trying to explain to you how we were in decline. You ignored us.

    We tried to inform you as to the fact our capabilities were being gutted. You ignored us.

    We tried to inform you of the damage the McDonnal Douglas way was inflicting, that it was was parasitic, sucking the life out of the company. You ignored us.

    We told you what was happening in the 97/98 production meltdown, and of why the 787 was failing and you ignored us.

    We told you Charleston was going to be an issue, a cash drain for a decade, that 787 was going to take years to recoup from just that, and that from that point on, it would always be a knife at Washington’s throat. You ignored us.

    In 2008 we went on strike, trying to recover a little bit from the devastating 2002 contract loss. You hated us, you jeered us, and you cheered Boeing. You blamed an economic collapse that started well before we went out ON US.

    In 2013/14 you cheered Boeing as it relieved us of our pensions, took back on benefits, and left us with 1% raises every other year. You threatened us with the end of the world if we didn’t accept this loss, not on our behalf, but yours. Yours exclusively.

    We’ve been trying to tell you of the destructive effects of a half adopted Frankenstein Japanese production system, that all the pretty pictures and time lapse photography were misleading, and the Lean Manufacturing as implemented by Boeing, was actually anorexia, starving the life out of our manufacturing capability, and that Boeing’s “Move to the lake” in Renton was an amputation of a limb that would choke our capabilities. You ignored us.

    We absolutely told you a global supply chain would not benefit anyone in the long run, that unloading engineering and manufacturing offshore, especially to nations that were not staunch US allies was a destructive business theory. You ignored us.

    We told you that Boeing no longer appreciated, celebrated, or rewarded experience, craftsmanship, or expertise, that instead it favored a new style of cookie cutter employee that doesn’t analyze, question, or think critically. You shut us off in favor of a stock chart that perpetually angled upwards.

    We told you that State sanctioned support both financially and legally was something Boeing never really needed, and would constantly be something Boeing would leverage against the taxpayer. You didn’t listen.

    We told you not to allow Boeing to use us and our jobs as hostages and human shields anytime it felt like it, when it wanted cash or some other largess. We told you that once done, they would do it again, and again, and again.

    You heaped praise on Stonecipher, McNerney, Muilenberg.

    We’ve told the stories of bad decisions, ineptitude, incompetence, incapacity, corruption and criminality.

    It was all pearls before swine.

    So now were are where we are at. And many want to claim that we shouldn’t look backwards, that then was then and we must ignore it and deal with the crisis on the table right now. That we should all cave into the fears of apocalypse and devastation. That the God Almighty Boeing, still basically under the leadership of the more or less the same people, the same business model, and the same management theories that got us here should be rescued from the world.

    The Coronavirus, Covid-19, wasn’t the cause of this. It was just the trigger. The same goes for our financial system, weakly underpinned, burdened with crushing debt and a stock market that was overvalued by a factor of four.

    And now Covid-19 is loose in the factories, and NOBODY in the aerospace or investment community wants to talk about that. NOBODY is talking about Boeing’s attempts at containing spot outbreaks, and how they are likely to fail. No, don’t talk about it. Don’t raise that as an issue. Boeing’s unionized touch labor force should not be considered. Hell you never did it before so why start now? Don’t try to tell us that it is about us, our futures and our jobs. Look inside and be honest about it. And stop using us as justification for your wants.

    IF I can manage a few more weeks without getting infected (being in a higher risk category), I’ll be drawing what’s left of my pension, even as Boeing directed the plan administrator to use pension funds to buy back stock at all time highs. I’ll say goodbye to my coworkers who have seen their 401-K’s devastated. Especially those that drank the Kool-aid and put it ALL in Boeing stock. The 401K did it’s job as designed a vehicle to eliminate the defined benefit pension, and transfer wealth from those who earned it with manual labor, into the pockets of of others.

    But I won’t be asking you to consider them. To consider Washington State or the greater glory of aviation and the aerospace industry.

    I don’t have anymore breath to waste.

    • Steve:

      I hope that you is not all of us. I have been saying that for as long as I can remember.

      Does the Union run a get out the vote operation?

      I don’t hold myself up as anything special but I do vote in every election be it city, state or national.

      It clearly only takes a few percentage points of turnout to change most elections. 2016 was driven by 75,000 votes over 3 states.

      • No. But you cannot vote your way past a major corporation with endless political resources. People can get mad all they want. Politicians have to find enough spine to deal with Boeing for what it is, which is capitalism’s dark side.

        • >But you cannot vote your way past a major corporation with endless political resources.

          Hear, hear: at least with our present political constructs.

          Bailouts for the people, I say; not for the airline industry.
          The money will be far better spent by the latter.

    • As a retired Boeing engineer, I scream BRAVO Steve. My blood boils as I consider the ineptitude I witnessed in the 20+ years prior to leaving, leading today to a company fighting for survival. I saw the half-baked 787 effort from its inception, and watched as program “leaders” squashed those who dared to bring them bad news, much as our Dear Leader is doing at this very moment.
      A bailout of Boeing is probably both necessary and inevitable, but by god there better be some meaningful conditions attached. Meanwhile I wonder if my next month’s pension check is going to bounce. I guarantee Jim McNerney’s won’t.

  12. The package passed and signed this evening, while not released in detail, apparently includes $50Bn in ‘secured loans’ to the airlines.

    Devil is in the details, of course. If the security is book value on older, owned-outright airframes that might have low cash value in a glutted secondary market, it won’t be much security.

    But at least this first round doesn’t appear to include grants, something the airlines were asking for and that I think are much harder to justify.

  13. This story is repeated over and over again, big corporation rewards its senior execs at the expense of customers and employees and then due to their OWN MALEFESANCE, go bankrupt and then have the taxpayers bail them out. This taxpayer say no…. You cannot unring the bell.. maybe Elon Musk can start a aircraft company. Cause Boeing brought all this on themselves… between the max, starliner, tanker problems meanwhile FIRED CEO walks out with 60M NO

    • As much as I admire Space X I am not sure Elton is the poster child for a traditional mfg for aircraft (or cars)

  14. Concur on all accounts. It would be fine if this editorial is picked up by other publications such as the Washington Post, NYT, WSJ, LAT, etc.,…

  15. If Boeing want’s a secured loan, (by stock or assets) to be paid back to the US Treasury, that might work, but, an outright bailout grant .. No way. If Boeing goes belly up, the US Treasury needs to be protected.

    • Added nothing to the Board except diversity box ticking and now when the going gets tough decides her political future cant have any blemishes.

      If the public purse supporting Boeing was such a problem, she has to look no further than her own state of South Carolina , which I doubt she had any problems with ‘state support’ ( she has had elected positions since 2004 and Boeing selected Charleston in 2009).
      It would cause a ruckus if there was any sort of golden handshake when leaving.

  16. There will be many, many entities seeking gov’t assistance soon.

    Not sure why airline businesses should be at or near the front
    of the line: do they grow food, provide water or shelter?
    Those things are what will be most needed..

  17. Unfair to many businesses such as small restaurants.

    Stuff happens – note that SLC had a earthquake very close to it, of magnitude that caused major damage to old masonry buildings and stone edifices like WA state’s capital building. That’s probably unprecedented for Utah.

    (I’ll bet Dixie Lee Ray would not have spent on rebuilding that edifice, if the damage happened, even when still recovering from illness before she died she was seeking facts and deciding on principle.)

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