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UK government says no industry-wide bailout for aviation

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UK government says no industry-wide bailout for aviation

Old 25th Mar 2020, 10:43
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Originally Posted by flocci_non_faccio
I think the aviation industry is going to come out of this smaller than it went in, but there is still going to be the usual demand for bucket and spade, package holiday flying (thinking purely about the UK market here).
Because we know that leisure travel isn't at all price-sensitive ...
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Old 25th Mar 2020, 11:22
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I think that once the virus is away (or under some sort of control) the airlines which survived will do whatever it takes to get bums back on seats. So, I'm not convinced that this will equate to higher fares.
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Old 25th Mar 2020, 11:27
  #23 (permalink)  

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Once this is over, the dictators in Dubai, Abu Dhabi and Qatar will attempt to dominate the world premium air travel market. Subsidised. They will be making plans now.

To avoid this take-over, the UK needs to have its planned and under-written global carrier/s ready to go. Otherwise we will lose again to the Arabs, not a tasty outlook. Protectionist barriers are needed. Stuff EK, ET, QR, and even possibly the Norwegians.

The opportunity will soon exist to beat them at their own game. Let us get ready, with a force of maintained airliners, current crews, and new regulations from the CAA. No red tape.
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Old 25th Mar 2020, 11:38
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Originally Posted by captain8
I canít feel sad for BA, Virgin , Skyteam et al.
huge profits. Big dividends. Nothing for a rainy day. Stand up for yourselves, and take it on the chin. You wonít make fat and obscene profits this year. And perhaps the public will not be so over indulged with cheap flights anymore, post virus.

The elephant in the room is Norwegian. Cant be too long surely ?
Herds of elephants, actually

If this goes on 6+ months, then why save airlines that are not optimally structured for the recovery (which will be torridly slow); then Govt can patch together a nationally-owned carrier and use the optimal equipment to build up an efficient structure for what the new world requires. Like who is going to choose to voluntarily go on holiday in the next year and sit next to 180-400 passengers for 3-12 hours separated by 17" left and right, and 32" fore/aft? The first cough or sneeze and panic will start.

Without being political, what seems most strange is that all the right wing Tory policies that they thought served them best over the last 12 years (corporate super-profits, austerity for the working classes, privatising the NHS, stopping the nanny state, and going ultra-small state intervention, oh and isolating ourselves from our colleagues in Govts across Europe who want a collaborative approach).... are now seen as completely the opposite of what we all are crying out for now (care workers, nurses, delivery drivers, sorters, stackers, ie: all those on minimum wages, gig economy types, and migrants that we apparently thought should go home). Since 2016 we have driven 50,000+ NHS workers out of the country because we didn't want them.

And most ironically, it could be that in 6 months China has the answer to everything we need, and the USA is crippled beyond belief.

But I may be wrong. Hey ho.
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Old 25th Mar 2020, 12:40
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Not being part of the CAT industry I can understand why air transport might be at the bottom of the support list. Without passenger air transport irresponsibly carrying the virus to virtually every corner of this planet in a remarkably short period of time we would not have this pandemic that is causing so much harm to the rest of the economy - not to mention those who unfortunately have not recovered or will not in the future. APT to/from affected areas should have ceased right at the start. It didn't due to greed.
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Old 25th Mar 2020, 13:32
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It is time to cut the umbilical cord. It is called private *business* for a reason. Free market (real capitalism) has to sort itself out. No more of this routine bailout mentality needed.
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Old 25th Mar 2020, 14:14
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Originally Posted by torvalds
It is time to cut the umbilical cord. It is called private *business* for a reason. Free market (real capitalism) has to sort itself out. No more of this routine bailout mentality needed.
And what will the cost of this be to the taxpayers? Virtually every other european gov is coming out with packages offering temporary loans to support the industry and save jobs. Loans, not handouts. Some of the British companies have asked only to get access to funds to get through this and then pay back on commercial terms, I canít really see whats wrong with that??

CP
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Old 25th Mar 2020, 14:39
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Originally Posted by CaptainProp
And what will the cost of this be to the taxpayers? Virtually every other european gov is coming out with packages offering temporary loans to support the industry and save jobs. Loans, not handouts. Some of the British companies have asked only to get access to funds to get through this and then pay back on commercial terms, I canít really see whats wrong with that??

CP
Could these companies turn to the banks on their own initiative and ask them directly for these loans?
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Old 25th Mar 2020, 14:44
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nationalization comes to mind...and kick out those blood sucking CEOs who's wages largly depend on stock exchange values.
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Old 25th Mar 2020, 15:00
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Originally Posted by kontrolor
nationalization comes to mind...and kick out those blood sucking CEOs who's wages largly depend on stock exchange values.
That's what aviation needs, government ownership. That will save our jobs and will give us job security. Make the airlines too big to fail. And why stop there, make/designate everything too big/too important to fail. Start with airlines and airports, then we nationalise the road transportation and rails, then agriculture next, car makers, groceries, window cleaners, etc. In the end we need all of these and more. Where is the end of this?
We might as well stop all private businesses and go full Soviet style. You know, just cut the middle man. We have all the "generated" money there is. We can not run out of those.
And please don't try to bring me down with those negative sentiments like "What about responsibilities and commitments, or pursuing unlimited growth while dealing with finite resources on our planet, sustainability of population growth, our freedom, the right to own private properties, the corruption what socialism brings, geopolitical tensions it results in". Those are for schmucks.
Maybe the answer is centralizing the power and control everything. Nobody's ever tried that, so why not give it a go. We could call it erm, I don't know, communism?

Nevertheless, I believe you are right and we are going to go on full retard and chose the easy way out again. At any rate, that's how it is lately, never to solve a problem just kick that can..

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Old 25th Mar 2020, 15:23
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Originally Posted by Bob_Harris_721
It seems supremely ironic that only yesterday Willie Walsh threw a tantrum over support for Flybe, and now he sees nothing wrong in government money arriving in BA!

To be fair to Mr Walsh (and I hate doing it) he has been against a government bailout of the industry. Some say its because BA is sitting on an £8Bn warchest and want to drive the competition (Virgin) out of business, but I couldnt possibly say.
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Old 25th Mar 2020, 15:29
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Originally Posted by torvalds
We could call it erm, I don't know, communism?
The fundamental goal of the economy is to keep the majority of the people occupied in a meaningful way. The problem with Communism is that there are no proper incentives, which causes people to become lethargic. Capitalism uses a carrot and stick approach to solve this, which means that people who are good at the game start to collect an ever growing part of the pie at the cost of others. Unfortunately the game has stopped now, meaning a lot of people are left with nothing. We need a system that makes a more acceptable trade-off between the two.
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Old 25th Mar 2020, 15:52
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Originally Posted by torvalds
Could these companies turn to the banks on their own initiative and ask them directly for these loans?
Commercial equity has all but dried up, even for companies that have preformed very well over long time and that have not required government support before, so I would say probably not.

CP
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Old 25th Mar 2020, 16:13
  #34 (permalink)  
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"Some airlines will never recover from this and I think we might have seen the end of low cost air fares, at least in the short term".

That already seems to be the case. Virgin have been absolutely creaming it at MAN since TCXs demise, there have been some eye watering prices over Christmas like £7k in economy to BGI { £810 from LGW on BA}. Even Jet2 have gone from the usual £275 quid return to over £400.
I can only see that these will rise again when the survivors have a market clamouring for a break.

zfw
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Old 25th Mar 2020, 16:26
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Originally Posted by CaptainProp
Commercial equity has all but dried up, even for companies that have preformed very well over long time and that have not required government support before, so I would say probably not.

CP
Exactly that is my issue here. If a bank (what is an expert in analysing risks and business finances -and it operates in the private sector) doesn't find a company to be worthy of a loan, then why would we ask the "taxpayer" to underwrite it instead?


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Old 25th Mar 2020, 16:35
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Originally Posted by CaptainProp
Commercial equity has all but dried up, even for companies that have preformed very well over long time and that have not required government support before, so I would say probably not.

CP
Agree

Unfortunately, the banks turned off the cash to most in January by holding back credit card sales cash.

.... and if 10% of companies get the interruption loans i'll eat my old uniform.... if you need cash the banks will not take the 20% risk and give it to you.

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Old 25th Mar 2020, 16:48
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Originally Posted by captain8
I canít feel sad for BA, Virgin , Skyteam et al.
huge profits. Big dividends. Nothing for a rainy day. Stand up for yourselves, and take it on the chin. You wonít make fat and obscene profits this year. And perhaps the public will not be so over indulged with cheap flights anymore, post virus.

The elephant in the room is Norwegian. Cant be too long surely ?
The only way to pay for the re-equipment is the "fat and obscene profits". Unless you make a lot of money, and aviation over the period doesn't, you can't buy new aircraft. The capital costs are ball crunching. But I agree the timing of paying a dividend to shareholders given where we are now, is insane.
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Old 25th Mar 2020, 16:50
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Originally Posted by procede
The fundamental goal of the economy is to keep the majority of the people occupied in a meaningful way. {...}
The game stopped in 1971. Since then we have this funny-money (FIAT) and more recently only digits on computer screens. This accelerated (and made easier) the wealth extraction/transfer. Braking down/dividing the society even further.
Agree, make capitalism great again.
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Old 25th Mar 2020, 16:54
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Originally Posted by torvalds
Exactly that is my issue here. If a bank (what is an expert in analysing risks and business finances -and it operates in the private sector) doesn't find a company to be worthy of a loan, then why would we ask the "taxpayer" to underwrite it instead?
That is not the issue here. The banks donít have access to enough funds to bridge all these companies (not only in aviation) through a crises of this magnitude and the issue will only get worse the deeper in to this crises we get.

Take easyJet for example, never made a loss and owns 70% of their fleet. Why not provide loans secured against assets in the company and save jobs?

CP

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Old 25th Mar 2020, 17:53
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Originally Posted by CaptainProp
the issue will only get worse the deeper in to this crises we get.

Take easyJet for example, never made a loss and owns 70% of their fleet. Why not provide loans secured against assets in the company and save jobs?

CP
Hence throwing cash at companies in this situation is not a solution. Currently we don't know when are things going back to normal. Therefore it can not be called bridging loan, but a high risk taking for an unknown period of time.
Why is/wasn't there a bail-in?

If there aren't enough funds to loan in the banks, then they must prioritize (or wait for the funny-money getting QE-d). We are indeed in a very bad situation.

I'd feel sorry (not sad, have enough important thing to worry about) to see E/J go, but make no mistake, if there was a market and demand, the "next day" there will be another privately owned airline to replace it. They are going to employ staff, pay taxes, the whole 9 yards.

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