For the second time in less than two decades, US airlines have come, hat in hand, to the government. This time, they stand to receive more than $50 billion in assistance to shore up losses stemming from the coronavirus.
As with the attacks of Sept. 11, the events grounding planes and keeping Americans from flying are no fault of the airlines—terrorism then, a global pandemic now. But in both cases, the crises have exposed how vulnerable airlines are to the disruption of normal business, and how much the national and global economy depends on their continued operation.
Ordinarily, airlines should not need help. They have recently enjoyed some of the most profitable years in their history, prompting Doug Parker, the American Airlines CEO, to announce in 2017 that the company wasn’t “ever going to lose money again. We have an industry that’s going to be profitable in good and bad times.” But business decisions—including spending 96% of their free cash flow over the past decade buying back shares—have left them deep in debt, with limited cash on hand in this time of crisis.
Now, politicians, academics and taxpayers alike have begun to question whether the government’s support should come with serious strings attached, once the Treasury Department takes equity stakes in carriers in exchange for its assistance.