[SimonS1]

Interesting question asked on another website.

The bigger airlines have been through a period of record profits, much of which has ended up with shareholders as share buy backs, executives have earned fat salaries and bonuses, and generally UK airlines take the first opportunity to shaft passengers by denying EU261 claims.

So now the airlines are calling for government funding, what would you expect in return? And what would you do about airlines that threaten to retrench people rather than take the support on offer?

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biguli76

[rferguson]

My take….if the government considers BA/Ezy/Jet2 ‘well run profitable airlines…’ why not buy shares in them? Although I am not part of the corporate world so I wouldn’t know the implications.

I guess what ‘we’ get in return is less unemployed people, less social security payments, continued tax revenue for the nation once we finally come out of this crisis. And the means to transport business travellers and tourists to the UK when things start to bounce back. London is like a ghost town without them.

Although of course IAG has said it will not ‘ask’ for a bailout. Although I imagine this has more to do with sitting back and watching Virgin go to the wall without one.

And 17,000 EasyJet staff have signed a petition for the government NOT to give EZY a bailout after they just paid out £170m to shareholders whilst at the same time shafting cabin crew (insisting on structual changes to cabin crew working conditions for the next EIGHTEEN MONTHS).

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[BackOfThePlane]

In a similar vein to the previous quote, I would hope that the British government would look to Delta and Richard ‘Man of the People’ Branson to dig into their pockets before agreeing to any bailout of Virgin Atlantic. And yes, rather than a loan, perhaps the government / taxpayer should be looking for a share of the company which they can then sell at a later date.

Let’s face it, the UK government finances are going to take one hell of a battering in the short term.

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[esselle]

And let’s not forget that very recently these airlines were all crying foul when Flybe looked to be in line for a Govt. handout, saying airlines had to be able to stand on their own two feet. Yes, the game has clearly changed, but…….

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[Johnnyg]

I, too, find it appalling that EZY have returned £170 million to shareholders with one hand and with the other shafted their staff.

Surprisingly I am not surprised with Virgin crying foul, when the going is good RB is all over the place doing his self promoting, however when it hits the fan he is the first to moan. If Virgin was 100% UK owned that would be one thing but bailing out Deltas 51% holding is simply not on. He didn’t exactly help Flybe either.

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[AJDC]

If the US gov’t bails out US carriers, I want 90% discount on all J and F tickets anywhere at anytime irrespective of when I make the booking for the next 5 years.

[MarkCymru]

Let’s ask for the slots back at Heathrow and Gatwick (they were public property which has, somehow, been converted into a private asset) and then let’s allocate some of them to incumbents and some to competitors, while requiring all to permit interlining and through ticketing (as BA was required to do with the slots it took over to Manchester and Glasgow). That should make the complacent incumbents do better whenever they come back

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Terence

[alanred13]

Listening to BBC Sussex local radio about a week ago they had an airline analyst on, I think he was an ex Commercial Director of Virgin Atlantic. He predicted that BA would be nationalised (as per Alitalia) and that the rest including Virgin would be allowed to go to the wall.

[openfly]

…..but isn’t BA a Spanish company now? How can the UK gov nationalise it?!

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LuganoPirate

[SimonS1]

I was thinking about that earlier. I’m sure the Government could find a nationalisation route.

BA is still a UK company but owned by IAG which is Spanish headquartered. It would likely by possible to nationalise, even without compensation. The alternative might be to effectively bring BA to its knees by taking away slots, removing its AOC etc and setting up a nationalised entity, perhaps out of the ashes of another airline.

The Labour Party would support such steps too.

[ASK1945]

[postquote quote=994096][/postquote]

………………. but wouldn’t this be an absolute absurdity? Nationalisation of the rest of the UK’s private train companies (which is on the near horizon) and maybe the airlines, by a government recently elected – with a massive majority – on a platform which derided the opposition Labour party for threatening to do just this.

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AnthonyDunn

[KRIyengar]

Maybe, it’s time to emulate Singapore, using this crisis and the airline industry’s call for state aid to bail them out as a once-in-a-lifetime opportunity to ditch the failed neo liberal economic model for good.

Although Singapore has one of the most globalized economies in the world, all strategically important companies – incl. flag carrier Singapore Airlines for example – are actually majority government-owned through one of two separate sovereign wealth funds of the Republic of Singapore. However, unlike in 1970s Britain and in many other countries even today, the Government of Singapore doesn’t get involved in running any of the companies it effectively controls. They’re all run by independent boards with the overriding aim of maximizing the return on investment (of the state and private investors). This ownership model has two advantages over the traditional (neo liberal) model:

1 . It allows the state to keep its strategic assets under national control as a trustee of its citizens’ best interests.

2. It allows the state to keep hold of the dividends and reinvest these via sovereign wealth funds in major upgrades or new infrastructure that is strategically important nationally and regionally, and it also allows the state to use dividends from successfully run companies where it is the majority owner to use as a nest egg for a rainy day on behalf of its citizens. This is what Singapore, Norway and Australia have been doing for decades, which is quite the opposite of what the UK has been doing for the past 40 years: surrendering control over the national economy by selling off all of its prized industrial assets to overseas investors and depending on the kindness of strangers, i.e. depending on overseas investors to fill government coffers through purchases of IOUs issued by the UK government to finance the national budget deficit.

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[SimonS1]

[postquote quote=994097][/postquote]

I think everyone (perhaps with you excepted?) can see the circumstances now are totally different.

Do you seriously think that when the election was held the airlines or Government were contemplating that 90% of aircraft fleets would be grounded? And that the economy would be on the verge of collapse?

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Terence, Flyboy18

[ASK1945]

[postquote quote=994100][/postquote]

You have completely misunderstood the purpose of my post on this matter. Of course I knew that the UK government did not know what was going to happen at the time of the December election. Nobody (outside of China, anyway) knew. I was just pointing out a bizarre situation.

Fortunately I believe that most of those reading this thread would have understood that. Cool it.

[stevescoots]

Maybe my solution is way too simplistic but if an airline has over 5,000 Direct employees in the UK, returned good profits over the past 24 months and pays Uk corporation Tax, then bail them out… if not then let them fail.

For every £ in, then they give up shares to that value at the market rate on the day, existing shares, not new diluted ones, up the point it becomes 100% nationalised.

For those that qualify, then they must move their primary tax base to UK for the time that UK Govt holds shares.

Once the crisis is over then 50% of all profits go back to the government to buy back shares at the purchased value + interest at the average govt bond rate from when shares were given up to when they were returned. The other 50% is retained by the company for either reinvestment or as cash reserve. Not a single share dividend is paid out or Director level Bonus paid out (normal employees get theirs) until the company is 100% privately owned again, of course bonus can be set based on how fast Govt gets its cash back.

In the case of continued losses then the govt puts in and takes out other shareholders until it is 100% Govt owned.

We cannot be in the obscene, but legal, situation where Virgin thinks it is even morally justifiable to ask for govt assistance when its main shareholders have significant personal wealth or Easyjet pays out millions in dividends the day before asking its staff to take weeks of unpaid leave and the govt picks up the tab on part of those wages.

When this crisis started in January in our company we immediately said no dividends will be issued this year despite having our best ever year last year. The cash stays in the bank as reserve to pay staff and overheads should we have to temporary scale down. Greed is good… but it does have its limits!

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