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Ministers are preparing a to throw a £4bn lifeline to the travel industry amid widespread public anger over unpaid refunds and fears for hundreds of thousands jobs.They could guarantee customer refunds if airline goes bust later like deposit guarantee for banks this will only make cashburn worse the government will have to take equity stake like they did with banks as giving Airlines loans dont help as they are not making any money to pay it back it can only be an equity stake taking on more debt is a bad idea . If they did an equity raise in last few weeks this would be 8 quid now taking on more debt with no income is the problem its frankly stupid now we have a heavily in debt airline in sector on its knees for next few few qtrs at least the board panicked they should have done an equity raise of say 1.5b then wait but loading up with debt first was wrong move .A equity raise on company with no debt would make share price fly the board were very poor but have no doubt Stelios putting pressure clouded their judgement what a mess
During a 3-month grounding easyJet would use around £1.2bn in cash;
My readjusted fig based on 80% refund rate 1.515bn cashburn not the currently assumed refund rate
During a 6-month grounding we would use around £2.2bn in cash; My fig 2.515bn
I am guessing they will be in air July in limited structured way but with rebookings and limited flyers
I have made out a cashburn rate of 90m per week so in 12 weeks thats 1.080b as they will be flying at a loss
so end of Sept thats a total cash burn of 2.595b .I am guessing a sale and lease back will be hard in next few months so
that leaves 2.8b - 2.595b so that leave around 200m end of Sept with out any unforeseen costs .
Stelios and all his equity can only be saved by stopping Airbus monies he knows that and is attacking the board but its to late as the planes are on factory floor they are nearly built . I think the board are planning to burn equity in a few months issue more shares Stelios has to come on board in a rights issue thats why he going mad/crazy with airbus money it will be him paying most of it in rights issue not the board when investor see these numbers next week which the board were trying to paint in positive light 2.2b loss for 6 months (positive) if grounded they say with certain caveats ?
nalysis by US-based Dollar Flight Club, based on patterns after previous crises, predicts average fare falls of 35% through 2021, but for prices to then double by 2025.
Flights will get cheaper as airlines desperately try to sell tickets – and then rise substantially as capacity falls, Charlton believes. “In the short term, the Ryanairs of this world are going to bomb the market with cheap seats to get revenues to survive. Others will try to match that and will collapse.” Capacity will then fall and fares rise, as supply is squeezed.
The widespread industry consensus is that there will be fewer airlines as the industry consolidates via mergers, takeovers and bankruptcies. Iata has warned of mass insolvencies should the grounding persist beyond May. Already, airlines would have started summer schedules – meaning fuller, far more profitable flights. Instead, Iata said this week it now expects to lose more than half its annual revenues in 2020, a $314bn (£249bn) decline.
CityJet, which is best known for flying routes out of London City Airport, sought the protection of the courts from its creditors due to financial difficulties that were exacerbated after its fleet was grounded by the Covid-19 outbreak.
This cant be forced higher by hope if you have lost money why not sell now and buy back lower I dont understand why get attached to a stock yesterday was a good sell in morning this price today will be a good selling point next week ,the company is not worth this kind of money simple as.
No they were a good business well run up to the covid 19 outbreak just bad luck now there trying to put out fires I am thinking they go a lot lower time will tell ,taking out debt to cover cashburn is never a good idea it will be the anchor that pulls them down Stelios was not going to help them in a rights issue so he left then no choice but to go for more debt so in a way he has helped bring them down
This analysis has shown that we have sufficient cash reserves to remain liquid across a number of scenarios:
o During a 3-month grounding easyJet would use around £1.2bn in cash;
o During a 6-month grounding we would use around £2.2bn in cash;
o During a 9-month grounding we would use around £3.0bn in cash.
All this cash is counting refunds in cash or flights so when the do fly a cashburn will be higher as a large percentage of customers will be flying on prepayed seats which they are counted in todays fig of 3.3b of cash on hand (which they dont fully have yet) so they will be flying at a loss for months not accounted for in todays fig I am saying a further loss of 75m a week for a good few months .
Some quick sums not perfect say they fly full capacity from Aug so accounting for 50% rebookings I make out that at a further 75m cash burn per week thats 1650m further cashburn till end of year assuming flying is only back to 80% of normal .
I said a few days ago they would be worth a punt at around 350 now thats gone out the window I dont know how low they can go as cant figure out their new cashburn they have bought some time they will in time and soon have to start the converting of debt into equity while issuing new shares, wiping out the value of the company’s current shareholder base how can they not, am i wrong
Its starting to come off a bit from this morning they must have started going through RNS in detail I finding a few elements of it fairly bad Cashburn and now certain people 50% not taking refunds are they then stating they will be flying prepayed customers in say the 4 QTR 2020 that money is included in current funds is that saying they will be flying at a massive loss in 4QTR as all that money is Deductible from current cash pile so whats the burn rate on that per week .Am I wrong in my thoughts