Were the Airline Bailouts Really Needed?
Summary
Private investors seem to be willing to throw money at everything these days, from celebrity-backed blank-check companies with no profits to troubled video game retailers, Bitcoin and digital art. Even during the depths of the pandemic, in April last year, Carnival Cruise Line managed to raise $4 billion in debt from private investors, just as the airlines were still negotiating their first rescue deal with the government. They made the case that if airlines were to fall into bankruptcy, there would be no planes ready to help revive the economy when the time came. They argued that pilots couldn’t be laid off and quickly rehired, since they need to be in flight regularly or training on simulators to be certified to fly. The government could have provided financing under that scenario, similar to the way it did when it rescued General Motors in 2009, taking a major equity stake in the company so that taxpayers could share in the upside when it recovered.