Question

Why airlines receiving financial aid from the federal government are prohibited from buying back stock or...

Why airlines receiving financial aid from the federal government are prohibited from buying back stock or issuing dividends to shareholders?

Homework Answers

Answer #1

Airlines companies who are receiving financial help from Federal government are prohibited to buyback the shares and issue dividend because these are not their part of the profits and these are the part of the loan to these airlines company and loans can never be used for Share buybacks and paying out dividend.

Only the results of the company which have been made out of the profits of the shareholders of the company can be used for paying out of the dividend and buying of the shares in a share repurchase.

So the airlines company cannot buyback the shares and distribute the dividend from financial aid from Federal government.

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