Originally Posted by sanicom3205

I was pretty young when the auto industry was bailed out, so I had to do some digging after reading this. I really don't think your comparison has any merit....

The restrictions imposed on GM were massive and far reaching. In taking the cash, GM agreed to:

-Selling their corporate jets
-Slashed the pay of union workers, and laid off thousands of workers
-Unions were banned from striking (probably not enforceable)
-Streamline number of brands produced (sold off the Saab, Saturn, and Hummer brands)
-Government bought 60% of the company in warrants for common stock and preferred stock. A union health trust received 17.5% stock ownership in exchange for delayed contribution to a health trust fund for retirees. Canadian govt bought 12% stock ownership.
-Executive compensation reduced to essentially $0

This was all agreed to before taking government cash.

Compare that to what AA has agreed to in exchange for government assistance:

-Prohibition on stock buybacks for one year after government loans are fully paid back
-No issuing of dividends to shareholders while receiving aid (can be waived by treasury department)
-Executive compensation capped at 2019 levels
-Stock warrants worth 10% of the loan amount that exceeds $100 million. These are non-voting shares
-Airlines must maintain a certain level of service between cities
-Guaranteed employment and recall of any employees subject to furlough for a set time frame


Really, the airlines were just given low interest loans and grants, and a few other minor impositions. A drastic difference to what was imposed on GM.




Off topic but the auto industry bailout is widely considered a giant success