What does it mean that airlines shouldn’t be allowed to buy back stocks?
In:
Company A is represented by 100 shares of stock valued at $1 million/share or $100 million total.
Company A buys back 50 of those shares. Since those shares now belong to the company, the remaining 50 shares outstanding now represent total ownership of Company A. It’s the exact opposite of a stock split.
Company A spent $50 million to do this, and is now worth $50 million. The stock price effectively hasn’t changed, the company has “lost” half its value, while shareholders just received a massive cash payment.
Company A, an airline suffering loss of business due to the epidemic, seeks a government bailout to the tune of $50 million. While Company A stock would have lost value as part of the recession, the buyback directly benefits the shareholders who turn right around and request free money from the government.
From Wikipedia:
> It is relatively easy for insiders to capture insider-trading-like gains through the use of “open market repurchases”. Such transactions are legal and generally encouraged by regulators through safe harbours against insider trading liability.
TL;DR – Certain airline rat bastard shareholders used a stock buyback to *legally* get away with insider trading, with the intention of immediately seeking a government bailout in the wake of a disaster. The rich are capitalizing on a disaster to make a quick buck at the taxpayers’ expense.
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