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I do not think the UK government will become involved here. I see something similar to Carnival (CCL) occurring, that is, issuing of debt and share dilution in order to secure capital. That should raise enough funds to keep the company afloat.
The IAG chart shows a descending triangle pattern which is usually a bearish continuation pattern which is part of the reason to why I think this will see 180p during April and possibly down to 160p where I think there is a good chance of the stock bottoming. I think that the airline sector is very depressed and will be a fruitful long-term investment.
Some posters on here make excellent points when they say buying at this price will be good in the long term but may not be the bottom during the short term. I expect most posters on here will buy into the next dip and sell out when it rallies 20% in the coming months which is why there is a lot of interest on entries and short term price movements.
I believe that the FTSE 100 will retest its recent lows and potentially break lower. The market fell aggressively so quickly that it became very oversold. The recent rally probably does not have much upside left before selling resumes. I expect the FTSE 100 to take out its previous low in the coming month but I may be wrong on this. Central Bank activism has always managed to save markets and turn dips into buying opportunities. I think investors have become conditioned to buy shares even on bad news because central banks can lower raises and print money to support markets. If you notice though, markets have not performed the same way after the Fed and Bank of England reduced rates and announced QE this time around.
I think patience will pay well here. Patience on pressing the buy button during this down-move and then patience on holding the stock and not selling on the first rally. If the sector gets destroyed then there will be ample opportunities for the surviving firms.
Just to add to that, the UK government have explicitly said that a state bailout where they take an equity position will only happen if every other avenue has been exhausted.
Two points on this. first, the qataries have a 25% stake in IAG. They will be the first we tap for cash...and it certainly would not be in their interests for BA to fall in state hands. It is handy to have powerful shareholders on board.
2nd point. After all avenues have been exhausted and all other possible sources of financing dried up, for IAG that is at least 2 years down the line! Besides, if this went on for over 2 years, IAG at a fraction of 200p would be the least of our worries! There will be a civil war before then, with worldwide riots and looting on a scale humans have never known. It would be about survival at that point....for those of us who are left.
Great post Triumph1, a few Rampers on here trying to drive the price lower. When things recover, people will be rushing to get away and have a holiday!! Things will pickup for sure.
Some very unscrupulous characters across all boards stating baseless lows and chatting the brown stuff. I think one such idiot mentioned 100p?...lol. that would be an 85% decline from it's high. Not even Norwegian have declined that much and they are on the brink of existence. If things ever got that bad, I certainly wouldnt be buying....besides we would have more pressing concerns regarding all of us being unemployed and a black hole recession that point.
As of 1st march, we had £6.4bn (7.2bn euros) cash. Cash burn at fleet running 25% capacity whilst maintaining staff was $200m per week....but now capacity has been reduced to 10% and staff costs have now been significantly reduced. Given staff costs make up 40% of operating costs, plus given the fact that capacity was shut in further, being very conservative I would put cashburn at around £80-£100m per week.
Let's say £100m. So £400m per month. Our mcap is now 4bn. Therefore at present cashburn, it would take 6 months of nothing changing for our cash balance (forget credit facility) to reach the present market cap! Not even mentioning assets, that is just cash. Given the forward looking nature of the markets, let's say 3 months.
For now, 200p is the base. If there are signs this will go on for longer....we will head lower. But for now, we are priced in for 3-6 months lockdown.
If travel bans are lifted by the end of the summer, you could surely triple your money given 1 year. Double your money virtually instantly. Added potential bonus...beautiful virgin "slots", he said with a northern accent.
the strings attached to aid (carbon emissions, halt on dividends, exec pay, equity issued to state) that the company will want to avoid if possible. If they need aid - and get it - then it means they're in even bigger trouble and the sp will, at that point, be a fraction of 200p
I also suspect there to be pressure on the govt to provide some further aid if KLM/AF are helped by the Dutch and French govts.
Good post sbphoy, I cant see what other bad news can drag this down much further for now, unless the wider markets drop further as the number of deaths increase dramatically. In terms of oil the airline will already be locked into prices, staff have been furloughed with immediate effect, majority of planes parked running just 10% of the operation largely Cargo, and repatriation. IAG will survive, when this is finished it is likely to be in a good position if some of its competitors don't to be well positioned in the market, when things resume. Its going to take along time to recover to previous price levels, I'm in for the long haul also, so hoping to do okay in the longer term view. GL All and take care!!
Seems that the same characters are presently calling lower lows on various boards. This has been steady around the £2-£2.20 area for 2-3 week, so no reason to suspect much lower than here.....certainly not £1.50 in my view. I'm back in here for what it's worth. Same through process as CCL...doesn the company have the wherewithal to see this through?...yes. Am I happy with this price?...yes. Will it be the best entry point?...perhaps yes or no, but that will hopefully not matter in the long run.
Clinging on to 200p at the end of the week. Next week starts the leg down.