American Airlines Shouldn’t Have Been Bailed Out – ryan

Photo: Jenny Kane/AP/SHUTTERSTOCK

Widespread Worker Shortages Are Makeding Their Presence Felt Across the American Economy, and Some Air Travelers Are Feeling the Brunt of that. On the latest Pivot podcastKara Swiser and Scott Galloway Discuss the Case of American Airlines, Which, Despite a Federal Bailout, Finds itself in a Similar Situation As Many Other Businesses.

Kara swiser: There’s Trouble for Travel. American Airlines is Canceling Hundreds of Flights Throughout July, Mostly Due to Staffing Issues. This time at the height of the pandemic, the Company furloughed thusands of workers. Meanwhile, American Airlines Ceo Doug Parker Made Over $ 10 million in Compensation During the Same Time Period. And they all got a lot of cables act Money, ETC., ETC. And now Employees don’t want to come back to work. So what do you think? What would you think of what’s happened here?

Scott Galloway: Well, I Think Is More of the Same. What’s shocking isn’t that workers aren’t coming back. What’s Shocking is that People Making $ 10 Million A Year Ares Shocked People Don’t Want to Come Back to 15 Bucks An Hour.

Swisher: Yeah.

Galloway: So it is nice that there is some truthes to the fact that the market is the ultimate arbiter and the fact that the market will seem to finally confine up the wages or peoples at Lower Income Levels. But look, i’m not a big fan of bailing out companies, small or big. I think we need to be more has with companies. Airlines Wold Still Be Frying if they’d All Gone Bankrupt. To be fair, a lot of say, Including delta and southwest, opted to get loans in the private markets. I Think American and United opted to take Loans from the Government.

But look, if you go back to long-term Capital Management, if you go back to the initial bailout of chrysler, all bailouts will be set up for Bigger Bailouts. And when you’re bailing out a company, the ceo will try to show it as saving Jobs and Saving America. And really what they doing is they Saving their Own Compensation, Because the Stock Goes Way Down, They Get Awarded Options, and THEN SOCK COMES BACK, they make $ 10 million. But when we were bail out companies, who we’re really bailing out is the one percent.

Swisher: You’ve said this a lot, yeah.

Galloway: If you look at the s & p 500 and you disarticulate it into decis and you take the Biggest 50 Companies and You Keep Going Down, there’s No A Correlation BetWween Size and Returns. And the reason why is that the market, which is smarter than all of us, absorbs the notion that there is a symmetric risk rheturn to the upside. Becusee if you’re too Too Big to Fail, The Government Comes in and Sayys, “Okay, Take Big Risks. And if they Work, Boom, You Make Money. And all we’re really doing with these bailouts at the end of the day is bailing out sharaholders, which by gross dollar amount, 90 percent to the top one percent. So all of these bailouts, they shouldn’t be calmed bailouts. They Should Be Called, “We’re Making the Rich Richer. We’re Making the Shareholder Class Richer.”

Swisher: SO WHAT SHOULD they have done here? This was an extended period of non-travel, and the business fell. Other Companies Laid People off – Airbnb Did This. Mory Others Did. How do you get People back to work if they don’t want to work? And this, of Course, is the Republican Calling Cry. I was in a supermarket the Other day, a very good supermarket. I’m in rhode island right now. And they could the deli counter counter gcause they didn’t have Enough workers, right? And so i asc ased someone and they were like, “It is Because Why Come Back to if You’re Going to Earn Less?”

But the minute that emploment benefits end, they’re going to go back to work. But they are going to pick the jobs, they’re going to try to get a better jab or a better deal. And some of these companies, which have been riding off the backs of workers for a while, are going to have a real problem. And in american airlines’ case, they laid off a lot of People and the Contrast – while it is more complex than just, oh, a ceo gets and workrs get furloughed – is really going to challenge employers to doter for employs, presumably.

Galloway: There’s a few components to this. And you summarized the first component performly. And that is, if a company-a small business or uber, whover it is-can’t survive with software that circumvents minimal-wage laws or with the emploment contract that Pays People plus type, that Business should. We don’t need Businesses like that. That’s Bad for the Economy. We can Also raise the minimum wage.

But i’m a big believer that you should be able to fire workers. The Countries That Have the Easiest Time Firing Workers Are the Countries that Hire Workers at the Greatest Clip Wen the Economy Comes Back. You should also let Businesses fail. They go out of Business. And be they go out of business… everyone imagines that no one would to fly again if delta went of business. No. The Creditors Wold Come in, Take Over The Company. The Shareholders Wold Be Wiped Out. Senior Management Woldn’t Make as Much Money. A lot of People Wauld Be FIRED IN THE SHORT RUN, AND THEN SOMEONE ELSE WITH FRESH CAPITAL AND FRESH LEGS AND A FRESH VITION FOR A POST PANDEMIC AIRLINE WAUDED COME BACK.

Swisher: This is something something that chamath palihapitiya said to me, is that things should just die. Chamath Can Be Very…

Galloway: Or be reinvent.

Swisher: Yeah. That’s what he was talking about. And THRO THAT ARE NOT INVESTING IN Growth Are Going to Be in Trouble. This was in the middle, right as the pandemic started. He Said, “Any Company that is giving dividends or overpaying its ceos is in Big Trouble after the pandemic.”

Galloway: Well, one of the Things that Makes America great is that we believe in pyrophilic plants. And THose are plants that are only borne of termination by fire, and fire is rejuvenating. And what happys is you kep bailing out these companies, all you’re doing, kara, is letting more brush and accelerant gather such as the actual crash, it is a firestorm.

Swisher: Yeah.

Galloway: You let Businesses go out of Business. And guess what? If carnival was allowed to go out of business or american was allowed to go out of business, there would still be an airline. People Wold Still Get from Point A To Point B. People Wauld Be Hirhed Back. And in terms of of Employees, i just find it shocking that Everyone look at this as an existential crisis. Its swimmes that People Don’t Want Jobs. People have said, “You know what? I don’t want a shitty jab. I’m sick of getting Paid no Money.”

Swisher: They’ve had an assessment. They realized the trade-off they’ve been doing and what they are putting up with.

Pivot Is Produced by Rebecca Sananes.

This transcript has been edited for legeth and clarity.