Remember that $2 trillion stimulus package that was inked just over two weeks ago? The one that is set to pay out $50 billion to the airlines. A measly $25 million in payroll assistance and another $25 billion in form of loans. Treasury Secretary, Steve Mnuchin, laid the hammer down and is forcing the airlines to repay 30% of the cash they recieve for payroll assistance and also offer stock warrants on 10% of the loan amount that can be converted to shares. Well, the cocksuckers running the airlines have a problem with that.
WSJ – “That surprised some airline industry officials who had believed the money would be in the form of grants, according to people familiar with those discussions. Airline executives spent the weekend discussing concerns with an industry trade group and seeking to negotiate adjustments to those conditions with the Treasury Department, federal officials and airline industry leaders said.“
Imagine an industry propped up on non-investment grade dog shit thinking they have the right to negotiate any type of terms. These guys are serial defaulters. The government money machine is practically on the verge of a red ring of death and they think Big Dick Mnuchin is just giving away free Trump bucks? How about the airline unions saying that because the Treasury is forcing corporations to repay some of the loans, it might be bad for the businesses. Do these people live in a fairytale land? No shit there will be layoffs and debt defaulted on. Here’s a thought, do not be over levered, it is that simple. If I take a loan out on my house that I cannot repay, it likely is not good for my financial stability.
The airlines are the kid at the family party who tells you they did not like your gift and we all know that kid fucking sucks. They are also your buddy who cannot hit you back for the venmo request because money is tight but then buys pot. No matter what, you will probably never get your money back. U.S. Airlines are down 50% Year to Date and that does not look like it will be changing anytime soon. Over the past five years the industry has declined at a compound annual growth rate of -10%. With dividends and share repurchases being halted in 2020 due to these loans, airlines are a pool of dogshit that even the biggest value investor would not touch. In fact, I would rather take Spirit for my next ten flights than invest in any of these money pits.
With that being said, what amazing timing COVID-19 is for Boeing engineers. An aircraft company that could not keep a plane in the air if it wanted to. Yeah, they probably will not be selling shit for over a year, but this must be so much better than putting paper airplanes with hundreds of people on board 30,000 feet in the air. The aviation engineers that could not catch a break in 2019 must be kicking their feet up and enjoying the lack of flights.
I’m no genius but it seems like these Airlines can take their loans, set aside the portion that is needed to be paid back to the government, and then have access to free money. I would like to reiterate I am no genius, just a dumb money investor trying to make it big.
Stay poor people
Standardly Poor 