This is from an article at Zero Hedge, which is not a reliable source (they are run by the Russians), but in this case is accurate.
We are in the virus crisis, and Boeing & the airlines are asking for handouts. Airlines are necessary infrastructure, but Boeing is simply a large employer, like say car manufacturers.
What is interesting is these are businesses that have made a lot of money in the last decade, but instead of putting it in the bank, they have been buying back their own shares. Less shares in the market causes the share price to rise, making investors and executives richer.
They are literally lining their own pockets instead of saving money in an industry that can be highly volatile.
Boeing has spent $100 billion buying back its own shares since 2013.
For example, Boeing’s report to shareholders in 2017 said:
- Solid core operating performance led to core operating earnings of nearly $5.5 billion, core earnings per share of $7.24 and a company-record $10.5 billion in cash.
- We continued to deploy that cash responsibly, repurchasing 55 million shares of Boeing stock for $7 billion and paying $2.8 billion in dividends. Encouraged by our performance and positive long-term outlook, our board of directors in December increased the quarterly dividend 30 percent and authorized a new $14 billion share repurchase program.
- Together, this sustained strong performance has driven Boeing’s stock price to an all-time high, hitting $184.83 last Friday, 38 percent higher than this time last year.
So, they saved just $700M of the $10.5B they made in cash that year, purely to enrich investors and execs (through bonuses). They then cut corners with safety on their MAX aircraft, causing their profits and share price to collapse. And now they are crying “poor us, we need help”.
This is a major problem with capitalism – too big to fail. Large corporations get handouts in times of need (and typically don’t pay them back), while siphoning away profits when times are good. Small businesses cannot do this, putting them at a distinct disadvantage.