Air Partner Share Discussion Threads

[studentinvestor13] 07/7/2020 14:20

Nice rise, but it's only a four bagger at 100 QS!

[qs99] 07/7/2020 13:20

Sorry, posting again, so near to actually being "through" a quid....cmon AIR....5 bagger from 20p low.....much more to come IMO.....! DYOR

[qs99] 07/7/2020 11:01

on the impact for AIR. Of course anyone getting COVID is sad, we have had all that with the SI thread recently. So once that is clear, views on possible impact on AIR?

£1 on the offer....

[trident5] 07/7/2020 08:45

Views? Clearly, it would be very bad/sad news.
Do you have a different view?

[qs99] 07/7/2020 08:35

Report in BBC of African COVID cases doubling and doubling quicker may open up new avenues for AIR? Any views? SOUTH Africa and Eqypt being worst hit

[qs99] 07/7/2020 07:16

Nice opening, can we push through a quid today?

DYOR

[qs99] 06/7/2020 07:17

Good morning all AIRers....let's see if we can break the quid this week....GLA

[qs99] 03/7/2020 18:24

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[onthemarblecliffs] 03/7/2020 17:38

Fair comment on your part too. We all want the same thing for AIR, i.e. success. Hopefully the new run-rate for profits is higher than in the past - even if less than currently. The CEO spent a large part of the shareholder update video talking about paying down debt, which I suspect was the real reason for the placing - growth opportunities being the fluff. Once the business settles down then I would hope they would take a closer look at the cash levels - and distribute some to us shareholders! There is a major difference between the cost of equity and debt for AIR currently. Onwards and upwards (hopefully!).

[qs99] 03/7/2020 10:11

haha, fair point, it is not all about the recruits/new offices as you say, I was merely addressing the point you made.

The placing said:

"The Directors have been encouraged by this strong trading performance, and believe the Company is well placed to continue capturing new business opportunities resulting from the impact of COVID-19. Accordingly, the Directors believe it is prudent to strengthen the Company's balance sheet, enabling the repayment of the debt taken on at the time of the acquisition of Redline Worldwide Limited in December 2019 and enabling the Company to capitalise on new opportunities arising from COVID-19 that will help drive organic growth, such as:

-- Significant government and commercial work;
-- Attraction of key talent with books of business across the air charter industry; and
-- Opening new office locations, in geographies where the market fundamentals are strong"

So to strengthen the balance sheet post deal as well as the new offices/talent.

So as I have said, they need to show they are doing those 3 bullet points, but maybe the office opening and teams will only take (say) £500k of that as you point out above, strengthening the balance sheet may enable it to bid competitively on work and ensure those govt/commercials don't think they are too weak to take it on?

Again, we won't know until they start announcing these things which they will need to do over coming months to maintain credibility IMO....

given the EBITDA it is making however, you do wonder why it is not chucking off more cash to cope with all this....let's hope management haven't awarded themselves some big FO bonuses or something!!

DYOR and good weekend
QS99

[onthemarblecliffs] 03/7/2020 09:28

QS99 - in answer to your question. I have not personally opened a new office (have you?) but I have worked in the brokerage industry for most of my career and know the transport industry - both asset heavy and asset light - very well. AIR is an asset-light broker - it is a collection of people with telephones at heart (although they do more than this). Where is the capital requirement? If you believe that this expansion is going to meaningful and costly then we will see a significant impact on the P&L, as the incremental costs will be staff related and thus expensed. Do you expect this? In my view this impact does not seem likely given AIR has opened 4 offices in the past 24 months (Dubai, LA, Houston, Singapore) with no need to raise capital - so how many offices is it going to open in the next 18 months that require all this capital? Transport brokers, whether air charter, ship or freight forwarders are always opening and closing offices: they don't and shouldn't need to raise capital to do so.
Alternatively, let's take it from a bottom up perspective - a charter broker makes around £30-40,000 a year (check this on glassdoor etc). You need to hire an office head and that is perhaps £80-100,000 (the highest paid directors at the likes of Chapman Freeborn and Air Charter Service earn c.£170,000). In the period of expansion from 2019 to 2020 AIR's operations employees grew by a grand total of 28. Assuming 4-5 employees in each new location then you are looking at incremental direct staff costs of c.£250,000 per year, on top of which you need to add office rent, taxes, equipment etc. They raised £7m in the placing - to reiterate just how many offices are they planning on opening?

[qs99] 03/7/2020 08:20

And market looks like it is finally recognising this and moving it towards the £1 mark

[qs99] 03/7/2020 08:20

agreed Markie7. Have posted similar above.

if we have any sniff of Q3/4 2nd wave, then AIR will be back into super huge profits again, not that it has stopped making v.v.good profits at the moment to be clear.....

[markie7] 03/7/2020 07:52

This is a play on the market, not the management. The key thesis is that air travel habits are permanently altered by covid. So far, this is working but it hasn't been going long. If AIR can deliver >£10m+ PBT year on year, it WILL get structurally revalued. Questions about management are one thing, but if this market is permanently shifting then either the company will grow accordingly or they will get taken out - either way all I see is upside.

The market changing is the key factor.

[qs99] 03/7/2020 07:04

Sorry have you ever set up a new office or recruited new teams? They do take up cash flow as initially there is no revenue coming in the other end of the hopper.

I agree that they need to show delivery/proof of such things, but don't say they have little initial cash outflows as they do.

[haywards26] 02/7/2020 15:51

Good post OTMC,

This is exactly my thoughts.

The CEO (most important role in an organisation) lost credibility several years ago. Until there is a change at the top here, the share price will continue to be impacted..

Additional talk of the placing funding organic growth (government contracts/talented staff/new offices etc) is just talk/spin. As such have little initial cash outflows..

[onthemarblecliffs] 02/7/2020 15:37

Encouraging update in my view - although trading could become a lot tougher in H2 if underlying cargo volumes fall (as they are likely to do) and PPE traffic declines; and passenger volumes do not pick up (either due to customer concerns or government action). This makes it difficult to know what the true profit run rate of the business is - and whether the problems of the past are fixed or merely papered over by a benign trading environment.
A new CEO would be encouraging - I still dislike the placing and his lack of take up: this may be a sign of impending exit. As for the rationale of the placing - AIR is an asset-light broker, expansion startup costs should not be material to its P&L (especially given some were undertaken last year).
I remain hopeful this converts from a (profitable) value trade to an investment.

[studentinvestor13] 02/7/2020 14:50

Great numbers once again. They are smashing it out of the park this year.

[qs99] 02/7/2020 13:27

They talked of fund raising providing cash for:

" -- Significant government and commercial work;
-- Attraction of key talent with books of business across the air charter industry; and
-- Opening new office locations, in geographies where the market fundamentals are strong."

Vague to some degree, they need to show progress IMO over next 3 months in this area

I'm not sure ALL the profits are deemed as "exceptional" and that is the point i'm trying to make, is this "exceptional" to some degree the new normal?

Also worthwhile noting that early to May they made £7.5m, so June must have been £2.5m alone ffs to get to £10m 5 months PBT.....not saying that will be repeated, but if 6 months could get to near £12m, why could £20m not be on the cards for the full year?

Biggest drag IMO is the history.....controls in place etc......so let's see

DYOR

[haywards26] 02/7/2020 12:49

I think 3 issues hold back the share price here.

* Current management competence and city reputation following the accounting scandal and recent years trading performance/acquisitions.

* A placing during a year of record profits - kinda sits strangely when no exact reason for funds was given (all a little vague).

* Current high level of profits being classed as "exceptional" so not really underlying or recurring..

The test of time will see if the above are overcome or not.

I do think the share price should be £1. But don't see the heady lands of £1.50 until the following;

* Trading levels Aug onwards are known
* Purpose of the recent placing proceeds are known - how invested etc

[qs99] 02/7/2020 12:15

good post

I agree. I think the travelling patterns of people will/have changed given this virus and possible future risks.

If you can afford business class, why not get a few together and go with AIR?

AIR will have built great / new relationships up during this period while others were struggling, enabling them to carry it all on in the future.

let's see. Some sellers are out, understandable, but on the way up from c.20p, these have zoomed, then profit taking, then zoomed again, so as I (and others it seems) believe these still to be materially undervalued, I'm happy to have added today and will be patient, waiting for them to hit all time highs over the coming days, weeks, months!!

DYOR
Cheers
QS99

[steeplejack] 02/7/2020 12:03

This is undervalued.I suppose that accounting affair stills affects sentiment but the shares should be well into three figures.The market is taking the current level of profitability as being 'exceptional' but it could prove to be a good deal more enduring than the current rating would suggest.

[qs99] 02/7/2020 10:05

Stepping up nicely.....personally expect to see this through a quid after that RNS....DYOR

[qs99] 02/7/2020 08:39

agreed. I see this as a £100m+ market cap company on these sorts of numbers and have placed my money where my moustache is!

Management need to show their organic growth plans work, are delivered effectively IMO, but travelling habits have changed for good IMO given this pandemic....AIR will continue to benefit IMO....

DYOR
cheers

[galeforce1] 02/7/2020 07:55

Interesting to see that John Lee has almost a 5% holding here now.