Top 4 airlines burned $45 billion on share buybacks since 2012. If airlines run out of money, Chapter 11 bankruptcy works. Airlines proved it.
“The leveraged share buyback game has ended, which also means an end to the phony earnings growth.”
Even after the bottom is perceived to be in, “buybacks may be slow to come back” as companies struggle for cash amid potential government restrictions on buybacks and their dismal public image: S&P Dow Jones Indices.
Chapter 11 bankruptcy that wipes out shareholders is the correct solution for collapsing share-buyback queens. US airlines already know this from experience. It works.
Having become a master of financial engineering instead of aircraft engineering. UPDATED with the announcement on Jan 21 that “ungrounding” of the 737 MAX will be further delayed.
The Biggest Share-Buyback Queens: When Will They Run Out of Juice?
Five companies blow $55 billion in Q1 to prop up their own shares.
The Biggest Risk for Stocks: The moment share buybacks get slashed.
There are now many of them. Shoring up the balance sheet is the opposite of “shareholder friendly.” It’s “creditor friendly.”
Companies buying back their own shares has “consistently been the largest source of US equity demand.” Without them, “demand for shares would fall dramatically.” Too painful to even imagine.