Originally Posted by
ACEssXfer
Ive already said this but what company in any industry in the world does/can plan to have enough cash on hand to survive at 10-25% of their normal revenue for 6 months?
This event is unprecedented(and may force airlines to adopt the above scenario). I’m not defending the actions of these companies but at the same time the sheer scope of the damage done by this particular crisis could not have been planned for.
Would you agree that it would be easier to survive a huge capacity drop for a few months without crushing debt?
True, you can’t predict the actual cause of a downturn (terrorist attack, financial market collapse, pandemic, shocks to oil supply), but rest assured after we recover from this one there will again be another one (also there will again be another pandemic, since 2000 we have seen SARS, MERS, EBOLA, and now Corona. Historically the Spanish Flue, Black Plague etc.). Why not build up cash and pay down debt? I disagree that this crisis could not be planned for...what can’t be planned for is when it will happen...we know it will happen again at some point. I will never own an airline stock, but if I were a shareholder I’d much rather see a healthy balance sheet than an artificially inflated stock price from buybacks. Healthy balance sheets inoculate businesses from external shocks like these. Though they don’t guarantee survival of the business they increase the odds.
All that being said, no grants, repayable loans only, and strong guarantees for labor and tons of strings attached for management.