If airlines didn't spend money on buying back stock, they could have:
1. Invested it in growth. But if they had invested it in all the normal things an airline might invest in, they would still suffering because of the pandemic.
2. Saved it for a rainy day.
You're arguing (2) should have happened. But an important thing to remember is that companies' savings are not like your savings — companies have far more reliable future cash flow, which means that they can borrow at much lower rates than you can through the equity markets.
If airlines had saved their earnings, maybe they would have grown at bond rates (investing the company's savings in the stock market is too risky and unorthodox for corporate finance officers). That's not good for investors who are looking for 1) return on capital and 2) higher exposure to travel. By returning the capital to investors, airlines increased their exposure to airline-adjacent things and their return on capital. That's a good thing for investors because it gives them more choice! If an investor wants a safer investment, they can create their own basket of bonds and airline stonks.
Similarly, now that the coronavirus has hit, investors know that airlines' fundamentals haven't changed — they're just hitting temporary turbulence. So, to raise capital, airlines can issue stocks and bonds to temporarily get them through 12-24 months. And that's exactly what they did last May: https://www.wsj.com/articles/aviation-industry-races-for-cas...
Basically: corporate finance is not like personal finance, and it's a mistake to think that companies need "rainy day funds." They don't: that's what the equity markets are for.
As for "rainy day" uses, giving the company pension fund a windfall would probably qualify.
Increasing the company pension would not have saved them from their current woes: they would still need to issue debt or equity.
It’s not common, though (and for the purposes of the comment you responded to, the distinction isn’t relevant). If management are saying “we can’t think of anything to do with this money”, most investors won’t disagree with them.
The pandemic is a case of exactly when the gov. should step in. Unfortunately the gov. is slow and takes so much time to do anything.
> That's a distributional issue, and the main solution is tax policy.
Exactly. I think a better argument could have been made by looking at the tax cuts a couple of years ago. Companies didn't go on hiring sprees or even keep any money in the bank. They did stock buy backs, paid bonuses, etc...so that when the pandemic did hit they had nothing to fall back on (see the airlines).