The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Itll need more than 7bn by time this is over
On a trading angle, when the Dow keels over (its started btw!) and this is on support area of 150p area, there will be carnage here.
Remember, the bottom could be ZERO eventually
Can you see a month of profits ahead in the next few years?
If you do please explain that crazy notion.
Itll be £5billion soon, then redundancies, then another month then followed by cash burn every month for how many months? 48 months?
Shareholders may be taken out, if you really think the future is rosey and there is a bottomless pit of dumb huge investors, then what can i say.
Does anyone have a rough idea how much itll cost to pay off 12,000 employees?
£500 Million+??
Costs of getting each plane back in the sky?
Costs of laywers?
Cost of penalties for cancelled new planes?
Cost of scrapping long haul planes early?
Cost of new debt?
Cost of ....the list goes on
And even when some of the flights get off the ground how can BA/IAG make a profit a) under restriction b) air passengers decimated c) quarantine post holiday etc?
Until things get back to anything close to normal, the new norm already is reduced capacity (30%+ from the top), that capacity wont be filled for years, if the group survives as it is.
Its burning A billion a month and the news gets worse and worse on a weekly basis
Even when we go through the lift off phases of Covid, there will be no lift off in the airline industry full stop. Airlines will continue to bleed huge money for all of this year and probably another round of redundancies, which will hit the cash again.
I cant see profits for IAG for years, airlines cant survive this year, never mind further years.
If any business has to and is even allowed to by its backers, to hedge at these insane levels, you have to ask very serious questions about the business model pre corona virus....never mind during or post cv19
Can you imagine all businesses hedging at this level? The leverage would bring down the biggest of businesses if it went wrong.
What are they hedging now? Whats their hedging position and how dangerous is it?
I find it incredible nobody is talking about this, its like investing in a bakery that turns a profit of £50k a year and the head baker is gambling on the flour price and making £500k losses
Mindblowing gross errors and the fact this allowed to happen by those pumping more loans into BA beggars belief.
Last years operating profit 135 M Euros
Over Hedging on fuel Loss of 1.35 Billion Euros
SO you send 45 million people to their destinations plus cargo, make 135m euros(poultry) and the gambling arm throws 10 times the profit down the pan?!
Sounds like a Bank pre last crisis
If they are cutting 25% early days after many warnings from the CEO pre corona, you can bet there will be further redundancies in the next 3-12 months....in times like these if you need to cut to survive a rough unsure new business model, you can bet your bottom dollar there are much more trimmings later on.
Expensive airlines are finished imo and as airlines realise larger planes dont make sense financially over the longer term, they will cut that out of the business. Ruthless times, im still surprised people (like Trump lol) think economies will bounce back 3rd quarter? Trump is hoping his multi trillion dollar pump of stocks will get him in office again as he paints some ridiculous obsessed landscape of roses.... the economic devastation is way more than reported, business closures and redundancies across the full spectrum are inevitable and govts cannot prop this up indefinitely. Big changes ahead, most havent woken up to the full ramifications on society and how the global recession is going to takes years to dig out of.
fear?
BA has virtually zero income
IAG is making huge hedging gaffs
BA wont be turning a profit for a long long time
can you imagine the costs of IAGs total redundancy costs? Never mind the the costs of getting planes back in the air
The list of woes is endless
30% of staff will most likely be paid off, the business model has shrunk overnight
this will take years to come back from, IF the group survives
145p area is the true support area, might take weeks, but thats where the flush will be IMO.
If that breaks then will get very ugly
I expect 200p test today/tomorrow... i might hold the first time, but itll go down further after it breaks
It was in trouble years ago, in trouble pre virus and now its in deep trouble.
Airline wont be back to where they were for possibly years.
Redundancies was inevitable, the business wont be there, especially with an airline thats expensive.
BA will be looking at conserving all lines of cash and chopping back on services, whilst reorganising the business to attempt some kind of plan to remain viable in the short to medium term.
I see a steady sell off to 150 pence over the next 2 months
brent has to see $63 area before next leg imo
indices mad today!
umm
So inflation took the Dow from 11,000 to 27,000 ??
Nope
Printing money as did the Bank of England
Its manipulation at God level
umm
ftse 250 no comparison to dow30
closest is ftse100
its clear the ftse has been strangled for 20 years imo
im going long on the dow...you?
imho, the ftse has already crashed over a long time and its gone unnoticed!
5% in 18.5 years against 117% for the Dow!!!
I call that a crash, not all crashes come wrapped up in massive hikes down, some are soft over many years
A crash is written in UK stock prices many fold imo
Just look at PMO as one example!!
my prediction is it will take 18 months and the ftse100 will range between 8,500 and 9,500
by end of next year
once Brexit agreed a surge to recent highs around 7,800