Airline bailout

[AJS-]

The only argument would be that it was the government that stopped them flying. If what I've heard (and it's very second hand so please correct me if you know better) is true then the airlines have been flying successful test flights and saying it's perfectly safe to fly. The government are holding them up.

In this case a law suit would be more appropriate than a bail out.

[10 Pence Short]

What should, but we all know isn't, happen is a technical and apolitical solution to the problem.

If the flights are safe, let's not prevent them taking off. If we're not sure, let's not take risks we don't need to. I hope decisions aren't being taken for any political gains.

Similarly, if airlines cannot live with the stand-down, let them find their own funding or fail. Why is there a sudden assumption that the only paople with cash are Governments? The reality is they are probably the worst people to take on additional debt. There must be commercial investors who would jump at the chance of acquiring stakes in or complete airlines for a low price.

[AJS-]

10 Pence Short said:

Why is there a sudden assumption that the only paople with cash are Governments?

Because they're the ones who've been taking huge chunks of it off everyone else for years!

I agree, it really should be decided between the airlines and their insurers whether or not it is safe to fly. Government are asking for trouble by wading in.

[oyster]

joe_90 said:

Insurance will 'Act of God' on it.. just like they already have done for people flights that have been cancelled etc.

But bks to this.. Its been a few days and they are moaning about going bust.. That just stupid, not a very robust business plan they live off is it.

Yeast Lord said:

Seriously I wish these stupid people that vote for labour and the libdemons would wake the fk up. Us working people need to march on Downing Street to stop them once and for all making decisions that no one in their right mind would.

I cannot see the Tories doing the same, I think its a EU pressure thing.

Edited by joe_90 on Monday 19th April 11:51

Actually it IS a good business plan.

Any business that carries too much spare cash is more vulnerable to hostile takeovers.

[Mr Whippy]

Is there a point where airlines will prefer to take a risk and hedge their bets on compensation, than not do business at all?

Ie, lets fly, and 1 in 1000 jets fails over the next X days of this eruption, and the cost of compensation is cheaper than the loss of revenue?!

Dave

[10 Pence Short]

Mr Whippy said:

Is there a point where airlines will prefer to take a risk and hedge their bets on compensation, than not do business at all?

Ie, lets fly, and 1 in 1000 jets fails over the next X days of this eruption, and the cost of compensation is cheaper than the loss of revenue?!

Dave

I doubt it. BA are losing £20m a day. Just a plane being destroyed is an asset worth a few hundred million to replace, which would I expect be uninsured. Then you have hundreds of millions (potentially billions) in compensation to the families of the victims. Then you have loss of reputation- who would fly with an airline willing to risk their passenger's safety to avoid losing £20m?

It doesn't stack up.

[Mr Whippy]

10 Pence Short said:

Mr Whippy said:

Is there a point where airlines will prefer to take a risk and hedge their bets on compensation, than not do business at all?

Ie, lets fly, and 1 in 1000 jets fails over the next X days of this eruption, and the cost of compensation is cheaper than the loss of revenue?!

Dave

I doubt it. BA are losing £20m a day. Just a plane being destroyed is an asset worth a few hundred million to replace, which would I expect be uninsured. Then you have hundreds of millions (potentially billions) in compensation to the families of the victims. Then you have loss of reputation- who would fly with an airline willing to risk their passenger's safety to avoid losing £20m?

It doesn't stack up.

If the chance is slim though?

1:1000 for the next few days while the ash is still kicking around?

Hmmmmm...

I do worry why they are so eager to get back up there when even they don't have the data to PROVE there is NO risk because of the ash cloud/stuff.

Dave

[cs02rm0]

AJS- said:

The only argument would be that it was the government that stopped them flying. If what I've heard (and it's very second hand so please correct me if you know better) is true then the airlines have been flying successful test flights and saying it's perfectly safe to fly.

I've heard that too.

Personally I blame Iceland, again. Isn't it about time we invaded?

[10 Pence Short]

Mr Whippy said:

10 Pence Short said:

Mr Whippy said:

Is there a point where airlines will prefer to take a risk and hedge their bets on compensation, than not do business at all?

Ie, lets fly, and 1 in 1000 jets fails over the next X days of this eruption, and the cost of compensation is cheaper than the loss of revenue?!

Dave

I doubt it. BA are losing £20m a day. Just a plane being destroyed is an asset worth a few hundred million to replace, which would I expect be uninsured. Then you have hundreds of millions (potentially billions) in compensation to the families of the victims. Then you have loss of reputation- who would fly with an airline willing to risk their passenger's safety to avoid losing £20m?

It doesn't stack up.

If the chance is slim though?

1:1000 for the next few days while the ash is still kicking around?

Hmmmmm...

I do worry why they are so eager to get back up there when even they don't have the data to PROVE there is NO risk because of the ash cloud/stuff.

Dave

You're the CEO of a multi-billion pound airline. The stoppage is costing you circa £20m a day and is likely to end in the next few days. You have funding in place to see out the planned duration.

Do you:

A) Sod the risks and small loss and fly anyway, risking the future of the entire business for a bet with a small £20m return?

or

B) Sit tight and reassure your passengers and investors that you're not going to do anything stupid?



It's a tough call...

[cs02rm0]

Now imagine you run RyanAir...

[bp1]

cs02rm0 said:

Now imagine you run RyanAir...

Who are now offering wing walking positions at only £1 a ticket......

[Bullett]

If one plane went down because of this, the whole airline industry would suffer a total loss of confidence by the public.

I already understand that ferry and train numbers to Europe are rising for the rest of the year.

This situation is so unexpected that it is realistic that the smaller airline could go under. I seem to remember that to be commercialy viable most airliners need to spend something like 75% of thier time in the air. This came up when most aircraft were grounded over the possible millenium bug. The models worked on this basis so there was even limited storage/parking space available for each airline.

[tinman0]

10 Pence Short said:

Similarly, if airlines cannot live with the stand-down, let them find their own funding or fail. Why is there a sudden assumption that the only paople with cash are Governments? The reality is they are probably the worst people to take on additional debt. There must be commercial investors who would jump at the chance of acquiring stakes in or complete airlines for a low price.

Why should the existing investors get hammered for an over cautious Govt body?

[10 Pence Short]

tinman0 said:

10 Pence Short said:

Similarly, if airlines cannot live with the stand-down, let them find their own funding or fail. Why is there a sudden assumption that the only paople with cash are Governments? The reality is they are probably the worst people to take on additional debt. There must be commercial investors who would jump at the chance of acquiring stakes in or complete airlines for a low price.

Why should the existing investors get hammered for an over cautious Govt body?

If that's the case and there's a material loss then the airlines and/or their investors can seek recourse through the Civil Courts, I presume.

[Rude-boy]

DSM2 said:

His point is that many airlines think it is safe to fly, and recent tests back them up.

A government department is stopping them flying, thereby directly hitting them financially.

Personally I would not like a bail out, but they do have a point.

This

[Mr Whippy]

10 Pence Short said:

Mr Whippy said:

10 Pence Short said:

Mr Whippy said:

Is there a point where airlines will prefer to take a risk and hedge their bets on compensation, than not do business at all?

Ie, lets fly, and 1 in 1000 jets fails over the next X days of this eruption, and the cost of compensation is cheaper than the loss of revenue?!

Dave

I doubt it. BA are losing £20m a day. Just a plane being destroyed is an asset worth a few hundred million to replace, which would I expect be uninsured. Then you have hundreds of millions (potentially billions) in compensation to the families of the victims. Then you have loss of reputation- who would fly with an airline willing to risk their passenger's safety to avoid losing £20m?

It doesn't stack up.

If the chance is slim though?

1:1000 for the next few days while the ash is still kicking around?

Hmmmmm...

I do worry why they are so eager to get back up there when even they don't have the data to PROVE there is NO risk because of the ash cloud/stuff.

Dave

You're the CEO of a multi-billion pound airline. The stoppage is costing you circa £20m a day and is likely to end in the next few days. You have funding in place to see out the planned duration.

Do you:

A) Sod the risks and small loss and fly anyway, risking the future of the entire business for a bet with a small £20m return?

or

B) Sit tight and reassure your passengers and investors that you're not going to do anything stupid?



It's a tough call...

I'm not speaking about any specific airline, just generally.

Those risking going bankrupt and seeing the chance as slim on these relatively flimsy meaningless test flights might feel they have not much to lose?!

Dave

[DonkeyApple]

cs02rm0 said:

AJS- said:

The only argument would be that it was the government that stopped them flying. If what I've heard (and it's very second hand so please correct me if you know better) is true then the airlines have been flying successful test flights and saying it's perfectly safe to fly.

I've heard that too.

Personally I blame Iceland, again. Isn't it about time we invaded?

We need to not just get tough on volvanos but the causes of volcanos. I'm amazed Brown hasn't jumped into this one. He loves picking an inane fight he can't possibly win. Maybe he is too busy duffing up Goldman Sachs today?

[10 Pence Short]

I think a volcano tax is the only way we can fight this. If there are no volcano related problems for a period of 2 years then the money is put into a special, ring-fenced 'Sky TV for people on benefits' fund.

[DonkeyApple]

A tax on volcanos is good in principle but it won't prevent the habitual offenders from erupting.

A change in the law is required to make the activities of volcanoes strictly regulated and subject to clear criteria and guidelines.

A regulator needs to be set up to monitor and control their activity and repeat offenders need to be met with aggressive tactics like ASBOs and curfues.

This would create thousands of jobs and raise much needed revenue to help people who have met Jeremy Kyle.

[10 Pence Short]

Does that mean John Prescott could be brought in as the Government's 'Volcano Tsar'? After all, he could understand better than most the volcano's ability to blow their top with only the mildest of provocation.