The Trump administration is negotiating a $500 million bailout for Spirit Airlines Inc (OTC:FLYYQ) to keep the struggling carrier from collapsing. Trump has publicly backed the intervention, framing it as a matter of saving thousands of jobs.
Marc Scribner, Senior Transportation Policy Analyst at Reason Foundation, in an exclusive interview with Benzinga, explained why the government shouldn’t bail out Spirit or other airlines with public funds.
Who Should Pay For Spirit’s Rescue?
Scribner argued that Spirit’s financial risks should fall on its own shareholders and lenders, not taxpayers, especially given the airline’s slim odds of recovery.
Calling it a “bad investment,” Scribner said that a government loan, or in the worst case, government ownership, just transfers the risks associated with the beleaguered airlines to taxpayers. “What is the benefit of perpetuating a financial zombie like Spirit Airlines?” he questioned.
He added that, as the chronic losses at Amtrak and the U.S. Postal Service demonstrate, the government has a poor track record of running commercial operations. The policy analyst also emphasized that the entire ultra-low-cost carrier segment is “pro-competitive” and government involvement would undercut competition.
However, Trump argued the government would acquire Spirit nearly debt-free …Full story available on Benzinga.com
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