Delta CEO Defends Taking Government Bailout After Stock Buybacks

When you make an investment in a business, you expect at some point to be rewarded.

It’s that simple, says Delta Air Lines CEO Ed Bastian.

Bastian, perhaps inadvertently speaking for his fellow airline chief executives as well, defended Delta taking a $5.4 billion bailout from the federal government in March as part of the CARES Act stimulus package on the heels of years of stock buybacks – $11.5 billion, in fact, between 2013 and 2019.
Speaking during an interview with Axios on HBO, Bastian said the buybacks are a normal course of business for any large public company.

“We’ve put all the priorities in the right place, but at some point, the owners of a business deserve a return, too,” Bastian said. “I have no issue with respect to the capital allocation discipline we’ve employed.”

The CARES Act payroll support program was implemented as a way for airlines to keep paying their employees in the midst of an unprecedented sustained collapse in demand for air travel. As part of accepting the combination of grants and loans from the federal government, airlines agreed to not lay off or furlough workers until after September 30, 2020 and were prohibited from buying back stock.

Bastian was asked on the program if he should have kept all the earnings as a so-called ‘rainy day fund’ in the event of something catastrophic like the coronavirus. The CEO said that would be impractical and not a normal course of doing business.

“I think our owners of our business would wonder what we were doing, setting up for a pandemic,” he said.