American Airlines is too big to fail. An AA liquidation would blow holes into the economies of all of its hub cities and eliminate 117,000+ jobs. It would destabilize Boeing. Congress will not let this happen. American will be saved like the auto industry and the banks during the financial crisis of 2008.
Once again we see privatized profit and public risk. Doug played fast and loose with AA's balance sheet because he's always known that he has the United State's tax payers as his safety net. A pandemic is not a black swan event. It's a white swan, pandemics are regular and expected. We just hadn't seen one in awhile. A competent CEO of a huge airline would have considered the risk exposure to a pandemic. Instead, Doug ran wild with debt and stock buybacks. He wasn't concerned with steering the company towards a stable future, he was making short term decisions for short term stock gains. Why would he care about anything else when he knows he has a giant, government safety net?
When the final, big, bailout comes, voters are going to be ****ed and congress will be forced to look tough. I'm not talking Cares 2.0, I'm talking ten months from now when all the CEOs are called to DC to grovel in front of congress. It'll be twice as ugly as the auto industry bailout. Do you think these pilot $400k a year total compensation packages will play well in the media? Do you think the voters of America will give us their money with no strings attached?
The industry will be totally changed. There will be unexpected winners and losers. Who knows what form of regulation will be attached to this bailout package.
And those of you who think the Covid will go away overnight, you might want to adjust your thinking. Cases are spiking again, we're approaching last summer's high. Does Covid scare everyone? Hell no, and it shouldn't. But... It's still running a 2-3% fatality rate in the US and a 30% fatality rate for older people who are overweight or other common conditions. That means pretty much all old people travel is gone. What percentage of the market are trips to see grandma or old people going to Florida? More importantly, how many businesses won't ask their employees to travel? Travel is going to be off by a huge percent until covid is stamped out. You can hope that people get less scared but a rational person doesn't want to risk their life for a business trip to Chicago. They'll stay home until it's all clear.