In Europe, there is a more complex relationship between companies and unions and countries tending to back certain industries over others. In the airline business, there are 2 competing companies Boeing in the US and Airbus which is headquartered in France. In order to ensure all European countries do not try to start their own airline, Airbus has significant operations across Europe. During the COVID crisis, one of the main factors in controlling the disease is to social distance and not be together with large social groups. This health concern has put a damper on tourism, entertainment and airports and transportation companies. Demand is down, coming back very slowly and the option of management is cut their payrolls. If the government is not going to subsidize the payroll, layoffs are a good option for it saves money or cuts down on spending money.
In an article by Johanna Decorse and Alexander Hubner of Reuters, thousands of airbus workers protested on the proposed cuts of 15,000 workers. Similar to workers across the world, those who work in industries that do not benefit from COVID are subject to layoffs and who should pay them? Governments around the world offered a short term solution, but as the economy does not go back to normal, when should governments step in and when should industry shoulder the burden?
One protester said we are starting our careers and thought we would have jobs until the end of our careers as long as we worked hard. Nobody could imagine this. In many ways this is true, prior to COVID Airbus and Boeing were the biggest players in a growing industry which allowed for more people around the world to travel. Times have changed.
Linking to dividend paying stocks, as an investor you have done your research picked a good company and expect to receive dividends because of the past history of the company. Then COVID happens and some companies benefit and some companies do not. It is not anyone’s fault that a perfectly good company such as Real Estate company owning Malls and allowing people to shop are suddenly rents are not being collected as the mall is closed down. Many people will be going through the same sentiment as the quote above, nobody could imagine this. Fortunately the governments around the world have provide assistance, but try to remove the assistance before everyone is back to normal will be very difficult. We will see more strikes because of uncertainty.
There are more questions than answers, till the next time – to raising questions.