Originally Posted by
Buzzlightyear
Worst case scenario is we end up like GM and Ford during 2008. Taking loans from the government. The banks were in a similar spot where they were forced to re capitalize but against their will. Mnuchin has been in contact with airline management about funding. The good news is the corporate malfeasance is not present like it was with the banks back then. Yes we did the buybacks but most people don’t care about that crap. Public perception is meaningful.
There’s a point to my response, I’ll get to it, but hang with me.
GM and Chrysler received TARP funds (i.e. “bailouts”) and both ended up nationalized by our federal government. The government spun off GMAC (GM’s financing arm), now Alliance. Also chopped GM’s dealership structure by 40%. And they sold off the majority of Chrysler to Fiat. Ford received a government loan in 2009 for $5.9 billion, with stipulations for its use towards hybrid/electric vehicles, they have until 2022 to repay that loan. See link below for more details.
The reason I bring this up is because there is a way to receive federal assistance that doesn’t include taking bailout money and letting the federal government into the hen house. Hopefully AA’s balance sheet is sufficient to receive a loan instead of a bailout.
2009 Federal assistance for GM, Chrysler and Ford.