To those who blanketly pan “European socialism” I wonder how you feel about Lufthansa paying back its government bailout in full and now the German government completing a sale of its stake in the airline for a profit of $760 million?
While German Taxpayers Profit From Lufthansa Sale, U.S. Taxpayers Will Not See Similar Returns
Germany’s Economic Stabilization Fund has just sold its remaining 9.92% in Lufthansa at a lucrative profit. €306 million was invested and the sale generated €1.07 billion, netting a profit of over €760 million.
Furthermore, Lufthansa has paid back, in full, its €9 billion bailout.
The result: Lufthansa is again fully privatized and German taxpayers have benefited handsomely.
Meanwhile, U.S. taxpayers were fleeced left and right by U.S. airlines who convinced two presidential administrations of different parties as well as a vast majority of Congress that it needed direct support to survive.
Airline direct aid approached $50 billion during the pandemic, justified on the grounds that airline demand had cratered 90% and such support was necessary to protect essential services that the entire economy relied upon.
But even with that money and the promise that airlines would be ready to ramp up immediately when demand increased, employee attrition through early retirements and buyout offers shrunk the U.S. workforce by over 40,000 employees and left airlines struggling (and ultimately failing) to be ready for the return of demand.
Meanwhile, United Airlines and Delta Air Lines have already promised their C-level employees generous cash awards the moment CARES Act restrictions are lifted. They claim this is necessary to maintain good talent. They’ve also found millions to invest in clean energy ventures but ultimately decided they did not need any additional government loans… which would have come with more strings attached…just the bailouts.
But, wait? Didn’t the U.S. get some airline stock in return? Yes. $260 million. That’s less than 1% of the $37 billion offered to airlines in 2020 and $13 billion in 2021 by the U.S. government.
CONCLUSION
Folks, I don’t know about you, but I prefer German corporate socialism to U.S. socialism. Fares are sky high and demand is back, but U.S. airlines have virtually no obligation to compensate taxpayers for saving them during the pandemic. Meanwhile, in Germany, taxpayers have more than doubled their investment and been paid back for their airline bailout. That’s effective stewardship.
image: Lufthansa
Well said, Matthew. This gets under my skin every day knowing how they fleeced the American taxpayer. I really wish there was a way the Government could find to force some of this money to be paid back. To me it verges on criminal.
I totally agree.
These people in government are detached from reality and what happens to the average American.
+1
Government of Canada made a similar move with Air Canada. They own 6.4% ($500 million) of Air Canada stock.
Reminds me of the 2008 US bank bailout. Hank Paulson and Tim Geitner made a huge investment and returned a $50B profit to US tax payers. If you (like me) believe government should operate more like a business, you have to love this move.
Good article.
Gotta love Capitalism.
Government handouts to corporations are not capitalism at all. A real free market would allow corporations to fail and permit true open competition. None of this exists it our airline system.
The conservatives and liberals in US are both grifters. Capitalism is a front to free load, grift and be complete a-holes. No wonder religion is very strong in the US. You always need a moral cover when you are an a-hole.
In any case i had written to some congress reps/ senators to make goverment take warrants in the airlines instead of giving them just cash with no strings attached. Covid was an excuse to grift on mega proportions, Capitalism my foot. The whole goverment industry revolving door is a mafia nexus.
Anyway if the US government didn’t make the money, who made it? It’s the industry leaders who will bribe the congress for their re election and the grifters in congress who indsider trade and call it capitalism.
“corporate socialism”? that sounds like capitalism to me.
I don’t always agree with Matt, but agree with this article. Its a shame the US didn’t follow the model of TARP, which was generally a profitable investment for the US Treasury (TARP had a net profit of $121 billion, but not every investment was profitable).
Just like Obama made a profit saving the auto industry. Remember?
Remember the 1990’s when the Democrats were in charge and budgets were balanced and we didn’t let a frat bow allow to towel heads bring us to our knees? Forget the 1950’s, the 1990’s were the glory years before Phil (gopher head) Gramm allowed the financial rape of this country…..
The U.S. Government should not be in the business of bailouts, period! You would have thought we would have learned that in 2008. Socialism is socialism no matter how you label it and it’s not good.
You summed it up perfectly, German Socialism vs American Socialism. We in the US pretend we have a free market and use Capitalism as a cover for a Socialist model that is only for the wealthy. Tax breaks, loan forgiveness, kick backs, cradle to grave financial and social coddling. While the working class is scolded for wanting something other than “Capitalism” for their hard earned money. Every time I praise the Euro version of Socialism, I’m told how much they pay in taxes. And I always reply that in the end, we pay the same, but we get almost nothing for our money.
@Matthew. Does your number quoted for amount invested include amount they contributed to operating costs while holding the shares, or is it just what they paid for the shares?