Did the $50 Billion Coronavirus Bailouts Effectively Nationalize America’s Commercial Airlines?

“The new rules, which the U.S. Department of Transportation (USDOT) issued yesterday, provide the industry with some additional flexibility for how many flights they’ll have to perform in order to access federal funding.

But USDOT’s minimum service standards will still require air carriers to operate money-losing flights in order to access government loans and grants, wasting both industry and taxpayer dollars, and potentially setting the stage for prolonged government intervention in the passenger airline industry.”

“the exact number of flights left up to the Secretary of Transportation to decide.”

“These loans come with their own set of requirements. Most significantly, the CARES Act gives the Treasury Department the power to demand equity in these airlines in return for loans, which it can hold for up to five years. (The government would not get any voting power with these shares.)

“What is the government going to pay per share on this? Right now, the share price is very low, at the level of support they are holding out, you could potentially have the government be significant, major equity holders in these carriers,” says Scribner.”

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