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September 06, 2005

US Buys an Airline in Bankruptcy Court

This is actually a good idea:

A federal bankruptcy judge on Friday approved a settlement between US Airways Group and the U.S. Pension Benefit Guaranty Corp. that resolves about $2.7 billion worth of claims.

The settlement gives the pension agency an ownership stake in the airline...

If we are going to have the federal government take over the pension obligation of companies that run to bankruptcy court, the taxpayer should at least get an ownership stake that recoups some of the costs if the company returns to profitability.

This may add up to very little value depending on the final details of the likely merger of the company with American West airlines, but the principle is the right one. If companies get bailouts from the government, the government should get an ownership stake to share in potential future profits.

Posted by Nathan at September 6, 2005 08:52 AM