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Bailouts and subsidies for everyone!


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Lets have a thread to keep track of bailouts and subsidies (public or private). 

I'll kick things off with our old friend Virgin Atlantic:

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Virgin Atlantic has been saved from bankruptcy after creditors voted in favour of a £1.2bn rescue deal.

The airline secured the “overwhelming support” of its 170 creditors in an important vote at the High Court today, during which the vast majority agreed to a complex restructuring plan.

A Virgin Atlantic spokesperson called the vote a “significant milestone” in safeguarding the beleaguered carrier’s future.

“Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel,” they said.

The Sir Richard Branson-owned airline had previously warned that it would run out of cash by the end of September if the businesses it owes money to did not support the proposed bailout package.

Measures include creditors agreeing to accept 80 per cent of what they’re owed, paid back in staggered instalments.

The company’s owners, the Virgin Group (which owns 51 per cent) and Delta Air Lines (49 per cent), have also agreed to stump up a £600m cash injection, while £170m of financing has been secured from US hedge fund Davidson Kempner Capital Management.

 

https://www.independent.co.uk/travel/news-and-advice/virgin-atlantic-saved-airline-bailout-deal-rescue-package-richard-branson-a9687941.html

 

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13 minutes ago, Warlord said:

Lets have a thread to keep track of bailouts and subsidies (public or private). 

I'll kick things off with our old friend Virgin Atlantic:

https://www.independent.co.uk/travel/news-and-advice/virgin-atlantic-saved-airline-bailout-deal-rescue-package-richard-branson-a9687941.html

Sorry, how is that a "bailout" (despite the Independent using that word in their headline)?

It's companies putting money into their own subsidiary, coupled with the subsidiary defaulting 20% of its debt.  Would be at home on a defaults thread, not a bailout thread.

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1 minute ago, scottbeard said:

Sorry, how is that a "bailout" (despite the Independent using that word in their headline)?

It's companies putting money into their own subsidiary, coupled with the subsidiary defaulting 20% of its debt.  Would be at home on a defaults thread, not a bailout thread.

It's a backdoor subsidy using cheap credit obtained under a fiat monetary system.

 

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2 minutes ago, Warlord said:

It's a backdoor subsidy using cheap credit obtained under a fiat monetary system.

Well at that rate you might as well list every company in the world on this thread, together with every person who has a mortgage, since they all benefiting from cheap credit in a fiat monetary system...?

A major company has defaulted on 20% of its debt.  That to me is the interesting point in this story.  

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1 minute ago, scottbeard said:

Well at that rate you might as well list every company in the world on this thread, together with every person who has a mortgage, since they all benefiting from cheap credit in a fiat monetary system...?

A major company has defaulted on 20% of its debt.  That to me is the interesting point in this story.  

Well its not the same. as 'everyone' as we're talking hundreds of millions of pounds in rescuing them. Under normal circumstances Virgin would have gone out of business and someone else took over the assets (landing slots etc) . They have been given a lifeline -- for now.

God know why and it makes no sense but there you go can kicked down the road.   

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10 minutes ago, scottbeard said:

Well at that rate you might as well list every company in the world on this thread, together with every person who has a mortgage, since they all benefiting from cheap credit in a fiat monetary system...?

99% of people who work would probably not do so if the company they work for did not have access to credit

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This is a thread about bailouts for the rich? 

Or is it about what happens when current subsidies end?

Ie are you monitoring the scale of subsidies going into the pockets of the establishment ? Or the little people starting to go bankrupt and starve?

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31 minutes ago, scottbeard said:

Well at that rate you might as well list every company in the world on this thread, together with every person who has a mortgage, since they all benefiting from cheap credit in a fiat monetary system...?

A major company has defaulted on 20% of its debt.  That to me is the interesting point in this story.  

Dont point out the tin hattery. 

It desends into gold coins to barter with very quickly. If only companies financed themselves with gold bars.. Etc etc yawn. 

 

What is interesting is the lack of government support for airlines IMHO. For example virgins major shareholder delta received a baikout from the usa, air France klm has had bailout 5 etc.. 

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The article uses the word creditors not debtors [and says there are 170]. I don't think this is loans/bonds etc it is at least in part suppliers [including long term - aircraft leasing etc.] who are only being paid 80% of bills for stuff already provided. Clicked through a few of those indy links but don't see any list/quantification of who the 170 creditors are.

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5 minutes ago, ebull said:

The article uses the word creditors not debtors [and says there are 170]. I don't think this is loans/bonds etc it is at least in part suppliers [including long term - aircraft leasing etc.] who are only being paid 80% of bills for stuff already provided. Clicked through a few of those indy links but don't see any list/quantification of who the 170 creditors are.

It will be a combination of all. 

They voted to take 80 % rather than push for 100%. Ultimately administration once you factor in the administration costs, all the secured creditors, staff etc is rarely more than pennys in the pound for unsecured creditors like suppliers. 

If they have any sense they will require payment up front for services going foward or at the very least have decent credit control procedures going foward. 

This isn't a new part of buisness. Although btl landlords will claim its only them that are affected 

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The  councils already got £3.2 billion from the  government (us and borrowed ) but want MORE.. according to the repot

Greedy so and so's . perhaps they should axe bureaucrats who are on six figure salaries .

 

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This is another example of the media using a term (bailout) outside of its common usage.  Thereby giving the wrong impression.  They do this quite commonly these days.

Technically, Virgin Atlantic has been "bailed out" by its creditors etc, this is true.  But most people associate "bailout" with state intervention, i.e. being bailed out by the taxpayer.

Everyone that sees this thread title will think it refers to taxpayer bailouts, not business deals like in the Virgin Atlantic case here.

 

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2 minutes ago, kzb said:

This is another example of the media using a term (bailout) outside of its common usage.  Thereby giving the wrong impression.  They do this quite commonly these days.

Technically, Virgin Atlantic has been "bailed out" by its creditors etc, this is true.  But most people associate "bailout" with state intervention, i.e. being bailed out by the taxpayer.

Everyone that sees this thread title will think it refers to taxpayer bailouts, not business deals like in the Virgin Atlantic case here.

 

Agree with the impression of bailouts - however most commercially sensitive deals will have a level of hidden Government underwriting to lower the risk.  For that the Tax Payer is on the hook for.

The worst case I know is Student Loans - UK Gov will underwrite all loans not paid back in 30 years, so the banks buying them are effectively risk free.

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20 minutes ago, Warlord said:

The  councils already got £3.2 billion from the  government (us and borrowed ) but want MORE.. according to the repot

Greedy so and so's . perhaps they should axe bureaucrats who are on six figure salaries .

 

Again it's not what most people think of as a bailout.

It's one department of the state requesting a bigger budget, not a business needing rescuing from bankruptcy.   Completely different.

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8 minutes ago, msi said:

Agree with the impression of bailouts - however most commercially sensitive deals will have a level of hidden Government underwriting to lower the risk.  For that the Tax Payer is on the hook for.

The worst case I know is Student Loans - UK Gov will underwrite all loans not paid back in 30 years, so the banks buying them are effectively risk free.

Do we actually know if the government is underwriting the Virgin Atlantic deal?

On the student loans, once again it is not what most people understand by a bailout.  You could say every bank account is underwritten by the government and so that is a bailout.  Is it?

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3 minutes ago, kzb said:

Again it's not what most people think of as a bailout.

It's one department of the state requesting a bigger budget, not a business needing rescuing from bankruptcy.   Completely different.

Not really. They want the government (and taxpayer) to bail them out, therefore it's a bailout.  You can disagree if you want 

 

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7 minutes ago, Warlord said:

Not really. They want the government (and taxpayer) to bail them out, therefore it's a bailout.  You can disagree if you want 

 

It's not what most people would class as a bailout.  The word has become associated with government bailouts of private businesses.

What is happening in your example is like the armed forces fighting a war and then needing a bigger budget.  It's just a section of government wanting a bigger slice of state spending.

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1 minute ago, kzb said:

It's not what most people would class as a bailout.  The word has become associated with government bailouts of private businesses.

What is happening in your example is like the armed forces fighting a war and then needing a bigger budget.  It's just a section of government wanting a bigger slice of state spending.

Not really. Council's are responsible for their own budget and accountable to the local electorate. What they want is for the national taxpayer to bail them out rather than levying the taxes on their own populations.

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1 hour ago, captainb said:

Dont point out the tin hattery. 

It desends into gold coins to barter with very quickly. If only companies financed themselves with gold bars.. Etc etc yawn. 

 

What is interesting is the lack of government support for airlines IMHO. For example virgins major shareholder delta received a baikout from the usa, air France klm has had bailout 5 etc.. 

There has been support for airlines. Ryanair, BA, Easyjet and Wizz Air got £1.8 billion between them. 

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Just now, Social Justice League said:

The current Tory government is pure socialist because most northern Labour voters jumped ship to "Get Brexit Done". 

The irony is hilarious.

It's not lost on some of us here. I believe many of their supporters are frustrated i.e @HovelinHove

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I'm not a fan of many of the state support measures in place (Furlough a great idea but the longer it's around the more difficult it gets to turn off) but the government has to acknowledge if the policy it sets to slow/stop Covid disrupts business and employment then it is responsible for their plight.

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