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Airlines and cruise companies don't deserve bailouts for coronavirus

John M. Griffin and James M. Griffin

Joe Biden’s sweep of primaries means Bernie Sanders’ ambition of socialism for the poor seems out. In its place, Congress and the White House are now devising a $1 trillion package of government grants, unsecured loans and tax breaks to bail out airlines, cruise lines and other highly levered companies. So long, Bernie. Instead, Washington is only interested in socialism for the connected rich, whose share prices have plummeted.

Yes, the COVID-19 crisis has taken us all by surprise. And yes, the economic fallout will be extraordinary. But why are so many companies already in such grave trouble? The answer is excessive leverage. 

Start with the airlines. Rather than using their profits from the past five years to pay off debts and save for a rainy day, the big four — American, United, Delta and Southwest — instead grew their combined liabilities to $166 billion, all while spending $39 billion on share repurchases. That number, which is only from the big four, is almost 80% of what they’re asking for now from U.S. taxpayers. Similarly, the three largest Cruise companies—Carnival, Norwegian, and Royal Caribbean—have liabilities of $47.5 billion and engaged in share repurchases of $8 billion.

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