And if everybody overreacted to minor issues like that, world trade would be crippled. How many times has the USA put punitive tarriffs on imports, &c?
While I disagree with many of the U.S.'s tariff policies, I think that if the EU, which owns equity in airlines, tries to impose sanctions on U.S. airlines because of a one-time subsidy, I think the U.S. would be justified in returning the favor, in proportion to the aid that each side's airlines have benefited from government subsidies/participations in the past. Nobody can deny that European Airlines have received, and still receive, much more assistance than Americans do. If the EU wants to make a point of this, the U.S. should fight fire with fire, and insist that Air France and other airlines are each 100% privately owned before they are allowed to land in the U.S.
Unless the government was actually responsible for 9/11 (which seems unlikely), this looks rather more like state-backed insurance.
Remember that all U.S. airlines were completely grounded for several days, and that travelers took many months to fly in numbers more or less in line with normal levels. This was not the case of European airlines, that kept flying except for their U.S. routes.
If the airlines had such insurance (which they don't - insurance is event-specific, like a particular crash), no insurance company would have been capable of paying billions of dollars, anyway. It's just like when a major natural disaster occurs, and the government steps in to help cover the damage when the insurance industry simply does not have the liquidity - this happens everywhere in the world.
Is it OK to hand money to airlines during a recession?
No. Look at United and American Airlines. Their present woes are due to a recession, and the U.S. government won't touch them.
When a supplier goes bust?
No, that's part of business. That is also why smart companies will try to ensure the survival of several suppliers of the same product (like engines), by offering choices or buying from several manufacturers.
For example, I used to work in the cigarette industry. There are only two major manufacturers left of cigarette making machines - Mollins of the UK, and Hauni of Germany (there used to be a lot more). Hauni machines are by far the best, most productive, fastest, and make the best quality product. But my company, (and all the other major cigarette manufacturers) makes sure that we buy at least a few Mollins machines every year, just to make sure they stay in business and to keep Hauni competitive. That's business.
During a war?
Unless the airlines are forced on the ground, like after 9/11, no. That's part of the business cycle too, unfortunately, and airlines should be flexible enough to adapt to fluctuations in demand. A complete grounding is like a total and artificial absence of demand, and it is simply unreasonable to expect an airline to survive with all their costs and no revenue whatsoever.
The only thing you should feel when shooting a terrorist: Recoil.