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March 18, 2021 07:20 pm

Were the Airline Bailouts Really Needed?

Andrew Ross Sorkin, writing at The New York Times: A year ago this week, Doug Parker, the chief executive of American Airlines, flew to Washington to begin what became a yearlong lobbying campaign for a series of taxpayer-funded bailouts during the pandemic. He wasn't alone. The campaign also included leaders from Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines -- all with their hands extended. The flight attendant and pilot unions were also part of the lobbying. A year later, as the stock market cruises to new heights, questions should be asked about the $50 billion in grants that were used to prop up the airline industry. Was it worth it? And was it necessary? The good news is that the rescue money likely saved as many as 75,000 jobs, most remaining at full pay. And that money also kept the airlines from filing for bankruptcy, and in a position to ferry passengers all over the country to jump start economic growth as the health crisis subsides. The bad news is that it is also likely that taxpayers massively overpaid: The original grant of $25 billion in April meant that each of the 75,000 jobs saved cost the equivalent of more than $300,000. And with each additional round of bailout money, that price has grown. The truth is that shareholders of the airlines have been the biggest beneficiaries. That includes airline executives, many of whom have been paid in stock for years and stood to lose millions of dollars if their holdings were wiped out. Airline chiefs collected tens of millions per year in compensation before the pandemic, in part by boosting their companies' share prices by regularly buying back tens of billions in shares. That meant setting aside less money for a rainy day -- or, in this case, a pandemic. But here we are: Shares of United traded below $20 in May; today they are above $60. The patterns are similar for the other major carriers. Airline stocks -- lifted by taxpayers -- are up nearly 200 percent from their pandemic trough and have almost recovered their losses. It is fair to say that we socialized the airline industry's losses and largely privatized the gains.

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