PSP 2.0; is it gonna happen?
08-02-2020, 07:46 AM
#101
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,307
Originally Posted by Excargodog
You are talking like it’s your Daddy’s Dem Party. It isn’t. It’s the ‘woke’ Progressive Dem party, To them it’s a zero-sum game and the only way anyone is better off than their fellow citizens is if they stole the other non-binary person’s fair share. They’d decompensate in a heartbeat if you told them you wanted to spend a third of a million taxpayer dollars (which by the time the IRS collects it and Treasury distributes it is what it would cost) to keep a pilot pulling in a quarter of a million a year to sit reserve.
08-02-2020, 07:52 AM
#102
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,307
Originally Posted by Downtime
I feel like the less they talk about the more likely it is to slip by. We aren’t liked so the less they mention us the better.
08-02-2020, 07:56 AM
#103
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,307
The fact that congress is at an impasse probably indicates the house is sticking to their guns on some issues.
One thing they're looking at is extended 70% wage replacement for unemployed workers.
https://www.reuters.com/article/us-h...-idUSKBN24X3OT
One thing they're looking at is extended 70% wage replacement for unemployed workers.
https://www.reuters.com/article/us-h...-idUSKBN24X3OT
08-02-2020, 05:48 PM
#105
Gets Weekends Off
Joined APC: Nov 2012
Position: Stick Monkey
Posts: 300
https://www.washingtonpost.com/opinions/2020/03/22/us-airlines-dont-need-bailout-stay-business/
It was nice to enjoy the 6 months of free money but I could not disagree with this argument against the first iteration of funding, and I still can't find it in my conscience to disagree with it now.... on the other hand, what happens is more a factor of the power of the Airlines' and unions' lobbying.... but one sentence stands out near the end of the article, "there is no good reason to favor airline employees over other workers hurt by the crisis " that really helped me appreciate the reality that at this point, we have way too many distressed people to disproportionately throw some money in to an industry that has proven time and again to be among the most chaotically unstable and money losing in the long run, their fault or not..... hopefully American et al can survive, but if they can't and instead enjoy the treat that Chapter 11 is, at least DUI Douggie will enjoy far more personal losses than most of American's labor.....
Exerts from Richard Squire, a professor at the Fordham University School of Law, teaches corporate bankruptcy law.
President Trump wants to give them the money, explaining in a White House briefing last week, “We don’t want airlines going out of business.” Yet there is no danger that the airlines are about to disappear, leaving the flying public grounded after the coronavirus crisis passes. Without a bailout, the air carriers would renegotiate their terms of credit with their lenders outside court, or they would file for Chapter 11 bankruptcy protection. Either way, they would keep flying.
Bailout-seeking companies typically portray bankruptcy as tantamount to corporate death. The business is shut down, the employees are all fired, and the assets are sold off for scrap. The airline industry’s own recent history tells a different story. Between 2002 and 2011, American, Delta, Frontier, Northwest, United and US Airways all filed for Chapter 11. All kept flying throughout, and all emerged intact. (Some have since consolidated by merger.) Most of their customers didn’t even notice.
Chapter 11 is tailor-made for companies like the airlines. It’s for firms that have suffered an unexpected drop in sales but whose core business remains viable. A prolonged sales slump can leave a company insolvent, with revenues inadequate to cover operating expenses plus interest owed on debt. Default then looms, and lenders refuse to roll over their loans. Chapter 11 gives such companies breathing space to keep operating while they negotiate reorganization plans that cut down their debt burdens, converting debt claims to equity. Restored to solvency, the companies are then released from bankruptcy protection. That is what happened to the airlines when they filed for bankruptcy before, and it is what would happen again now.
Trump also said he is worried about airline workers. Airline executives echoed this concern in a letter to congressional leaders Saturday, warning of “draconian measures such as furloughs” unless their companies immediately receive $29 billion in “worker payroll protection” grants (plus another $29 billion in loans or guarantees).
But the carriers would almost certainly be able to continue paying their workers in bankruptcy. Once a public company enters Chapter 11, it rarely has difficulty raising new credit to cover operating costs, such as payroll. This was true even during the 2007-2009 financial crisis, when, despite the general credit crunch, private bankruptcy lending reached a new peak. Bankruptcy loans to companies in Chapter 11 are extremely safe, because the Bankruptcy Code gives the bankruptcy lender a high-priority claim on the assets.
Workers from any industry idled during the coronavirus crisis would qualify for unemployment insurance, which Congress can augment as it sees fit. Given this option, there is no good reason to favor airline employees over other workers hurt by the crisis. And a large portion of federal outlays to airlines would end up in the pockets of bondholders and other investors, not employees.
The airlines’ problem is not the sort of illiquidity that plagued much of the financial sector during the 2007-2009 crisis. In a financial panic, banks and other financial firms typically run low on cash not because their revenues have collapsed (or costs spiked) but because their debt is coming due more quickly than expected. That is the essence of a bank run. The Federal Reserve can then keep the banking sector afloat by supplying stopgap credit until the run ends. Because the banks that qualify for such credit remain solvent throughout the crisis, they can repay the Fed in full, with interest, along with their other creditors.
Airlines aren’t running out of cash because their debts are coming due sooner than expected. They’re running out of cash because their revenues are much lower than expected. That’s a solvency problem, not a liquidity problem. Losses are inevitable. The only question is whether Washington leaves the losses with private investors or shifts them to taxpayers.
The president has also said he wants to back the airlines because the current crisis is “not their fault.” True enough, but an industry’s investors ought to bear responsibility for its direct social costs. Otherwise, the industry grows too large while underinvesting in precautions. Airlines doubtlessly provide a socially valuable service. But, as we have seen, that service can sometimes contribute to the spread of a contagious disease. The risk of further spread is why governments are banning international travel and why the public is shunning cramped airplane cabins. The resulting drop in industry revenue is thus the manifestation of a business risk inherent in the service the airlines sell. Airline investors, not taxpayers, should bear the resulting losses.
It was nice to enjoy the 6 months of free money but I could not disagree with this argument against the first iteration of funding, and I still can't find it in my conscience to disagree with it now.... on the other hand, what happens is more a factor of the power of the Airlines' and unions' lobbying.... but one sentence stands out near the end of the article, "there is no good reason to favor airline employees over other workers hurt by the crisis " that really helped me appreciate the reality that at this point, we have way too many distressed people to disproportionately throw some money in to an industry that has proven time and again to be among the most chaotically unstable and money losing in the long run, their fault or not..... hopefully American et al can survive, but if they can't and instead enjoy the treat that Chapter 11 is, at least DUI Douggie will enjoy far more personal losses than most of American's labor.....
Exerts from Richard Squire, a professor at the Fordham University School of Law, teaches corporate bankruptcy law.
President Trump wants to give them the money, explaining in a White House briefing last week, “We don’t want airlines going out of business.” Yet there is no danger that the airlines are about to disappear, leaving the flying public grounded after the coronavirus crisis passes. Without a bailout, the air carriers would renegotiate their terms of credit with their lenders outside court, or they would file for Chapter 11 bankruptcy protection. Either way, they would keep flying.
Bailout-seeking companies typically portray bankruptcy as tantamount to corporate death. The business is shut down, the employees are all fired, and the assets are sold off for scrap. The airline industry’s own recent history tells a different story. Between 2002 and 2011, American, Delta, Frontier, Northwest, United and US Airways all filed for Chapter 11. All kept flying throughout, and all emerged intact. (Some have since consolidated by merger.) Most of their customers didn’t even notice.
Chapter 11 is tailor-made for companies like the airlines. It’s for firms that have suffered an unexpected drop in sales but whose core business remains viable. A prolonged sales slump can leave a company insolvent, with revenues inadequate to cover operating expenses plus interest owed on debt. Default then looms, and lenders refuse to roll over their loans. Chapter 11 gives such companies breathing space to keep operating while they negotiate reorganization plans that cut down their debt burdens, converting debt claims to equity. Restored to solvency, the companies are then released from bankruptcy protection. That is what happened to the airlines when they filed for bankruptcy before, and it is what would happen again now.
Trump also said he is worried about airline workers. Airline executives echoed this concern in a letter to congressional leaders Saturday, warning of “draconian measures such as furloughs” unless their companies immediately receive $29 billion in “worker payroll protection” grants (plus another $29 billion in loans or guarantees).
But the carriers would almost certainly be able to continue paying their workers in bankruptcy. Once a public company enters Chapter 11, it rarely has difficulty raising new credit to cover operating costs, such as payroll. This was true even during the 2007-2009 financial crisis, when, despite the general credit crunch, private bankruptcy lending reached a new peak. Bankruptcy loans to companies in Chapter 11 are extremely safe, because the Bankruptcy Code gives the bankruptcy lender a high-priority claim on the assets.
Workers from any industry idled during the coronavirus crisis would qualify for unemployment insurance, which Congress can augment as it sees fit. Given this option, there is no good reason to favor airline employees over other workers hurt by the crisis. And a large portion of federal outlays to airlines would end up in the pockets of bondholders and other investors, not employees.
The airlines’ problem is not the sort of illiquidity that plagued much of the financial sector during the 2007-2009 crisis. In a financial panic, banks and other financial firms typically run low on cash not because their revenues have collapsed (or costs spiked) but because their debt is coming due more quickly than expected. That is the essence of a bank run. The Federal Reserve can then keep the banking sector afloat by supplying stopgap credit until the run ends. Because the banks that qualify for such credit remain solvent throughout the crisis, they can repay the Fed in full, with interest, along with their other creditors.
Airlines aren’t running out of cash because their debts are coming due sooner than expected. They’re running out of cash because their revenues are much lower than expected. That’s a solvency problem, not a liquidity problem. Losses are inevitable. The only question is whether Washington leaves the losses with private investors or shifts them to taxpayers.
The president has also said he wants to back the airlines because the current crisis is “not their fault.” True enough, but an industry’s investors ought to bear responsibility for its direct social costs. Otherwise, the industry grows too large while underinvesting in precautions. Airlines doubtlessly provide a socially valuable service. But, as we have seen, that service can sometimes contribute to the spread of a contagious disease. The risk of further spread is why governments are banning international travel and why the public is shunning cramped airplane cabins. The resulting drop in industry revenue is thus the manifestation of a business risk inherent in the service the airlines sell. Airline investors, not taxpayers, should bear the resulting losses.
08-03-2020, 07:07 AM
#106
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,307
The BK laws are significantly different now, compared to last time. Creditors are in the drivers seat and they could force liquidation for no other reason than they feel it will give them more pennies on the dollar.
If that were to happen, the process would already be past V1, the fed cannot just order the court to not liquidate... only recourse at that point would be for the fed to try to buy out the creditors. So liquidation and permanent shutdown of airline capacity could actually be a real threat.
Or congress could rapidly pass a law, but the asset fire sales would proceed in the meantime. Also recall that the FAA will suspend an airline's AOC if they are in significant financial distress... they know safety will fall by the wayside.
With that said, long-term no furlough clauses tied to aid is not good governance in general, the unemployment system could handle labor, just like all non-airline workers. It made sense to keep airline staff on the bench for 6 or maybe 12 months, so the system would have capacity to enable the economy if it snaps back. But at some point it does have to end. Exactly where is debatable. Most airline labor can be furloughed and then recalled quickly as needed. Pilots are the bottle-neck, not just cost but sim capacity as well. But the airlines can manage pilot staffing as some of them are doing now, with paid LOAs or whatever else they need to do to keep enough capacity on the back burner for a quick-reaction force.
If that were to happen, the process would already be past V1, the fed cannot just order the court to not liquidate... only recourse at that point would be for the fed to try to buy out the creditors. So liquidation and permanent shutdown of airline capacity could actually be a real threat.
Or congress could rapidly pass a law, but the asset fire sales would proceed in the meantime. Also recall that the FAA will suspend an airline's AOC if they are in significant financial distress... they know safety will fall by the wayside.
With that said, long-term no furlough clauses tied to aid is not good governance in general, the unemployment system could handle labor, just like all non-airline workers. It made sense to keep airline staff on the bench for 6 or maybe 12 months, so the system would have capacity to enable the economy if it snaps back. But at some point it does have to end. Exactly where is debatable. Most airline labor can be furloughed and then recalled quickly as needed. Pilots are the bottle-neck, not just cost but sim capacity as well. But the airlines can manage pilot staffing as some of them are doing now, with paid LOAs or whatever else they need to do to keep enough capacity on the back burner for a quick-reaction force.
08-04-2020, 09:49 AM
#107
Gets Weekends Off
Joined APC: Jul 2017
Position: CRJ9 CA
Posts: 4,083
Originally Posted by senecacaptain
No major airline will "cease ops." I repeat, no major airline will "cease ops."
Will they be the same size as Feb 2020?
Time will tell.
CR's typically only last 30-90 days. House is out for summer recess. when they return on Sept 8 to god knows what other dumpster fires are happening, they will have 22 days total, weekends included, until Sept 30. 22 days- we know how well they work together (House/Senate).....
Will they be the same size as Feb 2020?
Time will tell.
CR's typically only last 30-90 days. House is out for summer recess. when they return on Sept 8 to god knows what other dumpster fires are happening, they will have 22 days total, weekends included, until Sept 30. 22 days- we know how well they work together (House/Senate).....
08-05-2020, 09:38 AM
#108
Gets Weekends Off
Joined APC: Jun 2018
Position: 757/767
Posts: 537
CARES 2.0 would not be rolled out to save airlines from bankruptcy. The idea would be to help maintain a robust staffing level so the airlines are immediately ready to ramp up once the economy recovers. If we furlough 100,000 airline employees the transportation system will be significantly smaller post vaccine, which could slow a countrywide recovery. Airlines are a significant aspect of the nation’s infrastructure.
08-05-2020, 12:09 PM
#109
Gets Weekends Off
Joined APC: Feb 2007
Posts: 2,487
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