International Consolidat... Share Discussion Threads

[waikenchan] 14/3/2020 13:58

But they aren't going hand out cash unless they are going to the wall.

[careful] 14/3/2020 13:57

There is a huge difference between the bank bailouts and IAG.

HMG had to guarantee the liabilities of the banks (£2tr for RBS alone).
Much of it, our cash on deposit.

There is no question of HMG taking responsibility for the liabilities of AIG, or any of the hundreds of other companies that will be out with the begging bowl.

[hamhamham1] 14/3/2020 13:53

The terms will be decided by the lenders not the receivers in this market. The local govs terms will be more generous than any private or overseas state terms. The latters will want a good reward for their risk.

[waikenchan] 14/3/2020 13:50

OK, say the do get bailed out / given loans. That's going come at the price of shareholder destruction - looks lloyds bank, rbs,

[careful] 14/3/2020 13:50

£1 could be too high a price for a troubled airline with liabilities.

I think BMW sold Rover for -£400m. That is 'minus' £400m.
It was a good deal for them.

On a smaller scale I had a friend who bought a Hotel for £10,000 with liabilities attached.
He thought he had the bargain of a century but after about 3-4 years he too went bankrupt.

But aren't we all playing the same game buying shares in AIG(and other bargains) which relative to the good times are dirt cheap.

[dround87] 14/3/2020 13:48

If a company that was doing as well as iag was before all this can't raise a little support then no one can. It'll never hit 50p. The market isn't that short sighted.

[heialex1] 14/3/2020 13:44

Because those companies failed naturally. The Government will have to protect companies that are fundamentally healthy but could get wiped out by the virus.

[hamhamham1] 14/3/2020 13:42

Either way, bottom line is profits will be down and debt will be up for the short to medium term.

[jailbird] 14/3/2020 13:40

BA is big fish in IAG group.

[jailbird] 14/3/2020 13:40

Worst case scenario is if one of the airlines in the group are loss making and no longer viable..they can sell it on for £1 and off the balance sheet

anything is possible

[hamhamham1] 14/3/2020 13:39

That was when it was just BA? Will it be more complicated not as it's dual listed/owned in UK and Spain and all the now diverging regulatory issues that could bring? I can't see the UK gov propping up an EU company and visa versa, will be interesting to see how it pans out.

[jailbird] 14/3/2020 13:38

That could be an option again if needed
It is great option as the Market knows BA/IAG are a good bet

[jailbird] 14/3/2020 13:37

Correction

At the last 2008 downturn, i recall BA used a £350m convertible bond to raise cash, which they paid back once the airline recovered

£350,000,000 @ 5.80 per cent. Convertible Bonds due 2014

[m1k3y1] 14/3/2020 13:36

waikenchan.....they aren't allowed to.

[waikenchan] 14/3/2020 13:35

So why didn't do it with flybe, thomas cook. Maybe the the qatar sovereign wealth fund will takeover IAG...

[m1k3y1] 14/3/2020 13:34

jailbird....well remembered.

[jailbird] 14/3/2020 13:33

At the last 2008 downturn, i recall BA used a £300m convertible bond to raise cash, which they paid back once the airline recovered

[m1k3y1] 14/3/2020 13:32

waikenchan......there won't be time for capital raising etc etc .
Governments have to act very fast and with unconditional support, or they will regret it , with companies failing everywhere.

BoJo's giveaway budget will be meaningless.

[bonio10000] 14/3/2020 13:32

Happy to let IAG go bust with the rest of them.

Someone will buy the assets and move on with the same business in short order.

Not sure why the government should bail out IAG equity holders.

[m1k3y1] 14/3/2020 13:29

careful.......I don't agree about overpaid workforce.
Certainly the cabin crew have delivered massive cost savings to BA since 2010..potentially in the billions.

Their pay is now capped, overtime is non existent and they can work over 19.15hrs days.
BA have done very well out of salami slicing historical agreements.
Having said that, IAG will undoubtedly look to take advantage of this situation regarding employee agreements, contracts and conditions...especially with HM Gov deciding to leave EASA.

Times will be hard BUT if you believe that other airlines are in a worse position and that IAG will emerge with a greater market share, as I do, then it is all about timing.

[waikenchan] 14/3/2020 13:29

You are not offering loan to British Airways per se, you are offering loans to IAG - after all it will go under the IAG balance sheet as everything is interconnected.

If the goverment were not committing to bailing out flybe with all the fuss about the "economic importance / importance of regional connectivity", you got to wonder about if they would do it for IAG.

Before HMG would offer loans - they would need to see dividend suspension, capital raising - eg through share issuence leading to dilution etc. Lets hope it doesn't come to that.

[careful] 14/3/2020 13:27

m1k3y1

This notion that low interest rates are 'cheap' in a deflationary World is old fashioned outdated inflation thinking.

During the 1930's for about 5 years or so the aggregate inflation was -35% (deflation).
Everything became cheaper.

A 2% interest loan is very expensive in a deflationary situation. Anyone loading up with debt at low rates of interest could be making a big mistake.

1%-2% is very expensive.

Putting money in a safe for a few years could be a sound investment, the one that will outperform all others.

[hamhamham1] 14/3/2020 13:25

Regardless if interest rate levels near zero, loans still have to be paid back from future profits or shares dilution. Its not free money.

[careful] 14/3/2020 13:20

Additional zero interest loans may be provided to keep the company ticking over for 12 months or so.

This year going forward will be written off, loss making.
If this thing blows over within 6 months and things pick up, this will be seen as a blip.
There will be ruthless financial discipline and cash preservation.
Workforces will need to accept drastically reduced circumstances.

But the years of sloppiness and bad management, overpaid workforces will be ended.

[m1k3y1] 14/3/2020 13:11

ham......additional debt possibly but that could be advantageous if at low interest rates, which of course they would be.

I see Norwegian being available, one way or another and others failing.
Of course, whether anyone wants to buy is another consideration.