Much like banks the boards of airlines are incentivized to have high levels of debt supported dividends / buybacks because it’s a highly volatile industry. Money isn’t clawed back from investors, but cash reserves disappear in a downturn.
Really any high risk industry where profits can be extracted in good times faces the same issues. The possibility for concessions from governments or people they owe money to like retires and bond holders etc, then repeat the cycle while maintaining control incentives high risk strategies because they are leveraging other people’s money.
Much like banks the boards of airlines are incentivized to have high levels of debt supported dividends / buybacks because it’s a highly volatile industry. Money isn’t clawed back from investors, but cash reserves disappear in a downturn.
Really any high risk industry where profits can be extracted in good times faces the same issues. The possibility for concessions from governments or people they owe money to like retires and bond holders etc, then repeat the cycle while maintaining control incentives high risk strategies because they are leveraging other people’s money.