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Qatar have F-U money - the UK is being sold off bought up by foreign investments.
Take a look at who owns canary wharf. (at the end of the trail of the companies setup in various places like Bemuda for obvious reasons)
NuckyT, the general assumption is, if it's known it is priced in. Short term income is easy to predict. They already have the first 3 quarters of info.
To move the SP positively
- Exceed those expectations
- Guidance on their expectations for future
- Address concerns investors have (and how they intend to fix them, if they can do sensibly)
- Mention AI 1000 times in their reports
They have large cash balance... to maintain sustainability among their growth plans (which atm seems to be buying up smaller airlines). Profitability comes later.
Haven't got into profitability yet?
Dunno mate, told you IAG are not very good at communicating with shareholders beyond commenting on past events in their reports.
We are left to work out what we can, that is the aim of the game. You don't buy a failing airline with debt at cheap price and expect create shareholder value overnight, sounds to me like they have a longer term vision.
Which goes back to my question of why are you invested if you disagree with how its run?
https://sellsidehandbook.com/industries/industrials/airlines/ - Skip to the bit on cash
Think you should write to the IAG board about your thoughts and why they're not focusing solely on increasing share holder value for you. They are trying to create long term share holder values, not overnight at the detriment to their long term goals. Even so I am not of the opinion this company is a viable investment, I think the S&P 500 will likely out preform over next few years and there's plenty of other less risky investment opportunities.
If you have so many issues with how company is run, why are you invested here?
Be it 50k or 650k its nothing to them. Their goals is the long term vision of the company not pleasing the guy gambling on the stock price.
They have 12b cash, now aspects of that is going to be committed to it's M&As, aspects committed to deferred revenue and costs not yet incurred. Aspects committed to running a cash intensive business. Aspects committed to protecting themselves in such a volatile environment and business sector.
Those are only ones I can think off the top of my head, IAG is not very good at shareholder communication beyond commenting on past events in their results. I am sure they have other committed costs and provision for opportunities.
In short term IAG have a lot on their plate at the moment and economic uncertainties to navigate.
I don't disagree that buybacks or paying down debt could benefit the company shareholders. I just don't think now is right time. We can talk about how it would be nice if they did this and that but I prefer to focus on what they are realistically likely to do.
Personally what I would like to see (although I doubt it) is maybe like a 5 year plan of we aim to reduce debt to this level paying of X amount each year. We aim to buy back X amount of shares by 20XX
If we start splurging a billion here and there to increase share holder value in short term that money will quickly disappear.
As a highly geared cash intensive company with the goals that we know of, keeping that money in their pocket at the moment rather than creditors seems beneficial. This is business debt not credit card debt.
i don't think their focus is returning short term value to share holders if i am honest. i think retail investors who preferably want to be in a share as short time as possible "do this, do that, to increase value of the share in the short term"
if the irr was worth it y'all probably wouldn't be complaining so much, and the big money would be here.
whereas the board are probably planning 5-10 years ahead strategic growth. i don't think they give a ****e about joe bloggs 50k invested with the company and burning cash just to please them.
nobody complains at amazon for reinvesting their cash into themselves for strategic growth rather than giving out big divis. it is the business model they bought into.
Air Europa make sense for IAG. It is the business model you bought into, even in the name 'consolidated airline group'
They were wanting to buy this back in 2019, then Covid meant they could buy at a cheaper price as a recovery play. Sounds familiar with the rationale as to why a lot of people invested here.
This will pro-long the recovery (if it goes ahead) but will put them in a better position when they reach the other side.
IMO that recovery will be slow and the IRR will be lower than less risky investments opportunities out their currently.
Nucky, Airlines receive bookings/payments way in advance of the flight and when the costs will be incurred. Which sits in cash and deferred revenue. Airlines are very cash intensive to operate and costs can fluctuate a lot. IAG needs to maintain a chunky bank balance continue operations smoothly.
Debt is also a tool used to expand/operate beyond the means of your bank balance.
Their is also time value of money if they can make minimum payments on low interest loans, they can use that cash to generate money NPV of that loan will changed when it comes time to fully repay.
Estimate for operating profit - FY23
High: 3.8b
Median: 3.5b
Low: 3.3b
Short interest halved since mid Jan, in that time IAG up 10% - Seems to be anticipating some good results, let's hope IAG don't disappoint.
Decline or minimal growth predicted for FY24
Estimate for operating profit - FY24
High: 3.9b
Median: 3.4b
Low: 2.5b
You can only talk about the positives if you want but I find the negatives equally as important.
IAGs not likely to go bankrupt (I mean they managed to survive covid) , 'twas just a discussion on how debt is reflected in companies accounts and implications of the obligations you have to a creditor - Me personally I like to do my own forecast of different scenarios and how they are likely to impact the valuation of the company to manage my risk before I invest. It is not inconceivable that a highly geared cash intensive industry of which most smaller airlines fail could see one subsidiaries go bust.
The sentiment on here goes up and down with the SP. Stay calculated and take in all the info you can from the rampers and de-rampers to aid your own research, stock analysis takes many hours of research of which we don't have a team of analysts at our disposal :)
If IAG goes bust, on paper they are solvent so the company would be liquidated and then I think there is a priority list on who gets paid out to first of which I'd assume creditors for leases would be higher up on that list. (I know even less about that stuff so don't quote on that)
Given the size and income generated by IAG they can probably be competitive with the terms and who they choose to finance with.
My accounting knowledge is a bit hazy but it all works with a double entry systems so on balance sheet you would have recorded value of the asset or 'Right-of-use asset' if you don't technically own it of: 100mil on the flip side you would have recorded liability on the lease of 100mil so your net position on the asset would be nil
As you pay of the lease the expense goes to the income statement and the flip side reduces the liability on the asset so your net position on the asset increases.
Treatment at end of the lease can vary depending the type of lease and whether they opt buy or renew for a newer plane.
I kinda see the planes as like a buy-to-let mortgage (except the asset is not likely to increase in value but generate economic benefits for the business to operate without having to front the costs of aircrafts) - That aspect of the debt is smart debt, I am sure they have some 'keep the lights on debt' from their cash burning while they couldn't fly though.
IAG adopted the new accounting standard IFRS 16 ‘Leases’ from January 1, 2019, and has used the modified retrospective transition approach. IFRS 16 eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting model. On the Balance sheet, obligations to make future payments under leases, previously classified as operating leases, are recognised as right of use assets (ROU) with the associated debt. In the Income statement, the operating lease costs are replaced with depreciation (within operating expenditure) and lease interest expense (within non-operating expenditure)
If debt wasn't being paid down the SP would be in a worse position. What you are saying is expected and anticipated meaning likely priced in.
IAG could pay down debt quick. Flip side would reduce cash holdings and given they operate in a highly competitive cash intensive business may also not reflect well.
Ezj did go up... and you may have benefited if you bought at the right time and sold at the right time. The volatility of airlines does make for good short term buys/sell - For the LTH S&P 500 would out preform.
If it is known/anticipated it is more than likely priced in. (Remember who you are competing against and the level of resources they have) This company never had particularly great y/y revenue growth or profitability pre-covid. Currently going forward they are also in a lot worse position now, upcoming M&As may also further contribute to this. So must factor that in.
However as a lot of LTH are starting to realise, the upside may not be as much or as quick as they had initially anticipated. The S&P 500 will probably continue to out preform this share in the long run.
Unless IAG revolutionises and innovates air travel the future seems bleak and minimal growth prospects.