Raising that much, that quickly is a sign of weakness as much as investor faith.
No question in my mind, Air NZ burnt less cash today than Qantas relative to the size of their businesses and will continue to do so for the foreseeable future.
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I couldn't disagree more. I have seen the very strong proactive approach QAN have taken towards cost control and the amount of equity raised places them in an incredibly strong financial position relative to AIR. AIR is weak, has been fumbling and desperately needs to raise capital but at what price will the market support that ?
Air NZ's operating stats for June bit of a half way house. Loads and yields were ok considering and they have back 26% of their passengers and 44% of domestic revenue seat kms. The real test/surprise will be July's operating results which had the school holidays and no social distancing requirements.
International is now limited by NZ's managed isolation capacity set at 12k a month for the foreseeable future. In June they flew 26k passengers internationally so this will have to decrease especially as the number of outbound passengers is probably decreasing too.
If they can maintain a domestic load factor of around 80% while flying 70% of the domestic network in August they may come close to monthly cashflow break-even depending on the levels of flight credits, future bookings and lease payments. Regardless the trend will be clear.
With the election on Sep 19 and the op stats out near the end of September. That would be a good time to raise capital and restore the balance sheet, with a positive story of 3 months of rising demand and reducing cash outflows under their belt. I would not call that weak, Beagle.
The big risk is a re-emergence of locally transmitted COVID in NZ like what has happened in Vietnam.
A reality check. AIR flew revenue passenger kilometers in June 2020 (when for the majority of that month we were in level 1) of less than 10% of what it flew in June 2019. Their overheads will be similar to last year. Even if they can get up to 20% of former capacity overall the reality is that total overhead including staff is likely to be circa 80% of what it was. The prospect of a Trans-tasman bubble anytime in the foreseeable future is now looking like a wishful pipedream and there are clear capacity restraints at the boarder restricting passanger repatriation flights.
The truth is Covid 19 looks like more of a problem world-wide than it did a couple of months ago and until there's a highly effective vacine that's widely available the prospect of any meaningful international schedule apart from freight is extremely dim.
I think they will be doing very well indeed if they can reduce the cash burn to $100m a month in FY21. If others think that's an investable proposition for a major capital raise with an unknown timeframe to when the airline might be profitable again...then I wish you luck, you're going to need it :eek2:
https://www.stuff.co.nz/business/ind...ening-position
https://www.stuff.co.nz/business/ind...aland-ceo-says
IATA thinks it will now take until 2024 - another year longer than it originally forecast - until air passenger traffic gets back to pre covid levels.
https://www.voanews.com/economy-busi...onger-expected
I flew in with AIR this morning from LAX on a Dreamliner. They had 3 PAX in business class, 3 PAX in premium economy class and 83 PAX in economy class. The cargo hold was full. A crew member that has been flying the route regularly last couple of weeks it has been fairly similar on the flights he's done.
I have to say AIR did well with pre-flight communications, boarding and in-flight service.
Air NZ can't do anything about Australian or NZ government rules. Only 30 pax allowed per plane into Sydney and Brisbane now so cancellations inevitable.
Think you'll find their costs have already dropped more than 20%. They cut 30% of the staff remember? Fuel is still down about 1/3. Leased planes will be returning and parked planes don't need as much maintenance. That is the big 4 cash costs. Other variable costs will be down too and others non-existent like overtime, bonuses and new plane payments. The government has also cut aviation fees. If the current trends continue, no way their monthly cash burn is $100m+ in August or September.
If a re-emergence of locally transmitted COVID in NZ is the big risk, it is balanced by a vaccine being available at the end of the year. Lots of vaccines going to phase 3 trials in the US and UK now.
sounds like a tick for air nz. And glad you managed to get where you want to go.
Another tick for air nz from me.
Although the time taken to be able to use the credits from cancelled flights has been a hassle, i'm happy that they've got the tool up and running. The airpoints used to pay for cancelled flights were credited to my account a while back, and today i booked and paid for flights using a credit from a ticket paid with real dollars and it worked seamlessly.
All these articles and wild guesstimates are just plucking numbers out of thin air. I don't see how anyone can give any half informed forecasts about world travel or tourism at this stage, except that it will get much worse before it gets better. Until we have a reliable and widely available effective vaccine, things are looking very bleak.
Long-term, for the most part, things will not remain this way. If the virus continues to mutate becoming more infectious but less virulent, people actively take precautions to slow the spread, and we can inoculate against it, then we'll slowly return to our former ways. That's just human nature.