Airline Bailout:
Welfare for Stockholders and Bankers

Sep 24, 2001

Within 48 hours of the attack, the airlines had gone to Congress asking for money. Air travel eventually was shut down, they had no idea what number of passengers would be flying when they reopened. But they were sure they wanted money. Congress obliged. It gave the airlines five billion dollars cash and said it would back another 10 billion dollars in bank loans if the airline companies weren’t able to pay them back.

Certainly, the shut-down cost them money. But if it really put them on the brink of bankruptcy, as some of them say, then it was because before September 11, they were in bad shape.

The airlines have already announced 100,000 layoffs or about 20% of their workforce. These workers will be getting only unemployment compensation, which is typically about a third of their normal pay check. The government is providing nothing for these workers to bring their pay up to what it was before September 11.

For years, the airlines have been going into debt, buying each other up. This past year American Airlines bought TWA, issuing debt to do it, and assuming the debts that TWA had rolled up. This added to American’s interest payments, cutting into the profits it has left for the stockholders. This is only the latest in a string of such purchases. And it had nothing to do with the events of September 11. But using the anxiety caused by those events, American, along with other airlines, is coming to demand taxpayers’ money to help them out.

Of course, Congress, which gave no money to “bailout” the 100,000 or more workers whom the airlines want to lay off, was more than ready to open the treasury. In order not to appear too generous, it, however, did set some conditions: The airlines can’t raise the pay of executives who make $300,000 or more a year, and they can pay them only two years of severance pay if they lose jobs! No unemployment checks for them!

They are just like the electrical utilities in California. They use a crisis to shake down the taxpayers to bail them out.

If there really are problems, they are of the airlines own making, and more generally capitalism’s making.

If the price of jet fuel has gone up, force the oil companies who make superprofits out of their investments in the Middle East to reimburse the airlines–and all the rest of us.

Let the banks that received billions of dollars in interest payments out of the profits made by the airline workers each year for the past decade now make a sacrifice by doing without interest payments. Let the stockholders who received dividends all these years and a rising price of their stock, now make a capital contribution out of their own pockets to the airlines they own to keep them in the sky. Let the top executives receive the pay of a baggage handler or a counter agent–it will give them an incentive to understand the need for workers’ wage increases. It’s a lot less of a sacrifice than those rescue workers made who ran into the World Trade Center.

And if they don’t do that, then let government money be used to keep all the workers employed. No layoffs, not a hundred thousand. Not a thousand, not one.