International Consolidat... Share Discussion Threads

[silkstag] 14/4/2020 19:42

IAG cash at 31 December 2019 was £4bn (not m1k3y1 asserted £9bn)[Accounts pg 134]. If CEO asserts £9bn liquidity he must include say £5bn credit facilities i.e. short-term overdrafts. These typically run 90 days. Who will fund their repayment?

IAG total 2019 expenses were £23bn [Accounts pg 132] so burned £63m per day. Planes grounded saves fuel, plus furlough grants and some other saved costs. When they fly there will be some revenue with restricted flights say 20-50% full. I estimated above that IAG would burn £6bn cash in 2020 trading losses = £16m pd. I intended that to be a mid-range estimate.

With £23bn costs in 2019 and revenue decimated, it could be much worse than £6bn. But WW is hard-nosed and resourceful so I assume he will do the ugly things to contain the 2020 trading damage to £6bn cash.
Cash to pay redundancies will be on top.
Cash to buy committed (now deeply unwanted) new planes will be on top.
Plane/kit write-downs are not cash but will add about £6-8bn to the above 2020 losses.

This is why I believe that WW and his team are now working 98% for the creditors, not the shareholders (rump 2% punt equity = 10p value on refinancing).

Target share price 10p by July 2021. All imho. DYOR.

[m1k3y1] 14/4/2020 19:03

not as much ............

[foreverfalling] 14/4/2020 18:49

How much cash does IAG burn through a day just sat there? Heard that Delta airlines (obviously a different setup) burn $60m a day and without bailout they will be at 0 cash in 45 days...

[hamhamham1] 14/4/2020 17:36

Let's see where the share price is in 12-18 months.

[arai] 14/4/2020 17:34

And JETS EFT as mentioned earlier is up nearly 4% today.

[m1k3y1] 14/4/2020 17:17

Logan .......If I recall , you also have no financial interest in the Shares of IAG ?

[loganair] 14/4/2020 17:11

Worldwide aircraft groundings as part of the effort to stop the spread of the Covid-19 virus will lead to unprecedented losses for global carriers, the International Air Transport Association (IATA) has warned.

The aviation body has revised the projected global impact to the industry up from $252 billion to $314 billion in lost revenue.

[smithys2019] 14/4/2020 16:56

Future potential. People buying the brand and the value of the company for the long term.

[m1k3y1] 14/4/2020 16:32

Silk......are you going to answer my question ?
why are you posting when you have no interest in IAG shares ?

Or are you just trying to talk the share price down ?

BTW Walsh and the IAG RNS say they have 9.3B in liquidity........of course IAG could be wrong and you could be right LOLOL

[silkstag] 14/4/2020 15:29

At 31 December 2019 IAG had:
€13 billion capital commitments to buy 79 new aircraft.
£13 billion current liabilities and £16 billion long term liabilities
versus £4 billion cash and £7 billion other current assets.
£24 billion fixed assets.

Net assets were £7 billion.

So if the fixed assets have fallen 33% ie £8 billion in value, group has negative balance sheet. 2020 trading losses will burn £6 billion cash?

And the €13 billion plane buy obligations are a giant boulder around its neck.

Ouch! All imho. DYOR

[m1k3y1] 14/4/2020 13:22

Silk.......why are you posting when you have no interest in IAG shares ?

Or are you just trying to talk the share price down ?

[silkstag] 14/4/2020 13:09

What % of pre-covid capacity do you think IAG will do in next 12 months? I assume about 20%.

Talkimg about airline relative strengths is like a horse bridel manufacturer in 1900. Yes we are a good one, so all creditors will get 80-100p in £ instead of 25p. Shareholders will get 2p in £ instead of 0p. Great. IAG is working only for its creditors now.
Maybe 7 May Q1 results will write down assets enough for market to work that out, along with empty 2020 bookings data. Maybe after Q2 results in August, or Q3 in November. I know shareholder delusion takes a while to dissipate. Here management did nothing wrong so hard to swallow being wiped out. But creditors will be mostly ok. All imho. DYOR.

[m1k3y1] 14/4/2020 12:28

Silk....you still haven't answered why you are posting when you have no interest in IAG ?

Are you shorting ?

[silkstag] 14/4/2020 12:17

I have always liked BA and respect its CEO. Iberia is less alluring. No magic wand for passengers who won't fly. 80% reduction in turnover will rout any business with high debt and high fixed costs.
Axe route capacity and employees. Refinance at new reality of 10p share price to meet liabilities. This is all sad. Suggest rescue your remaining cash and keep it for the 10p rescue prospectus.
Intra US air travel will recover. International business is doomed to 75% revenue loss. Spain will dog worse than most. So IAG is especially troubled.
All imho. DYOR.

[hamhamham1] 14/4/2020 12:08

Silk stag. I presume you forecast an even worse fate for all the other airlines with larger debt and less money in the bank?

[m1k3y1] 14/4/2020 11:46

Silk...I suspect that IAG will implement a redundancy program , once the furlough period ends but it will be directed at the UK operation, as , unfortunately the UK laws are not as helpful for British Employees as they are for EU .

So, cheaper for IAG to make UK employees redundant and to restructure the UK operation.

I don't see the disaster scenario that you portray and believe that Walsh has a very good understanding of the airline industry.

I will be buying more.

[silkstag] 14/4/2020 11:29

Yes, IAG can manage losses on its grounded and 10% full flights with furlough grants during 3-6 weeks of government mandated spring lockdown.
But what about advanced bookings for summer 12 weeks? Voluntary passenger no-fly. No grants. Wild losses.
Then 12 weeks autumn voluntary passenger no-fly at say 10% of before etc. No grants. Wild losses.
Do they put all planes in air 0-20% full for 6-12 months? No. They mothball and/or sell 75% of planes and the employee redundancy axe is wielded, in multiple waves.
I recollect Spannish redundancy costs are huge. At a human level I hope the UK employees are treated generously. Good people. Done nothing wrong.
What giant losses on writing down or selling say 50-75% of fleet?
Creditors still get 100p in £ + interest.
All this comes out of shareholder hides.

Shareholders in groups with huge debt and huge assets are slaughtered when asset utilisation % crashes, the asset values crash.

IAG will be refinanced once it has a viability plan at say 25-50% of current fleet and employee numbers, or whatever it is. But creditors will own 98% of the value in 15 months, shareholders a rump punt 2% of peak = 10p target share price. All imho. DYOR

[tiananmen] 14/4/2020 11:12

If you can understand why IAG are not looking for a bailout, then you'll understand why IAG are in a very strong position when this virus passes

[hamhamham1] 14/4/2020 11:01

And what better time than now to let your $60 per barrel hedge run out, barely used, whilst setting up new long term hedges to be in place for the future at $20-25 per barrel?

Note to self, no more positive posts today!!!!

[hamhamham1] 14/4/2020 10:57

Oh no! We'll be getting on next :)

[m1k3y1] 14/4/2020 10:55

ham...good response, far better than mine !

[nemesis6] 14/4/2020 10:54

gotta be better than EZJ

[hamhamham1] 14/4/2020 10:37

To be fair these costs are near zero or drastically reduced currently:
Fuel.
Oil.
Landing Fees.
Catering.
Crew Expenses, such as travel, hotel and per diem expenditures when taking trips.
36,000 staff on furlow.
Maintenance and servicing incurred through flying hours.
Etc.

No doubt there are many other costs which can go into hibernation or be drastically reduced?

I am not saying there isnt an element of risk but you seem to imply that they have the same costs whether running or not. True, they are making a loss currently, but it's about how to finance the tick over for next few of months, money in bank, loans, share dilution? No one knows the future including you or I. It's worth a small punt in my book, but not for you, fair enough. Let's see where we are in 6-12 months.

[m1k3y1] 14/4/2020 10:35

Silk....in that case, if you have no interest in IAG, why are you wasting your time posting on this BB ?