Lease have you got the min 250 mio they are down on their fuel hedge ?
Also , redundancy costs won’t be small ...,.
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Lease have you got the min 250 mio they are down on their fuel hedge ?
Also , redundancy costs won’t be small ...,.
Good start, however you might have overseen some cost. Some things which immediately would spring to mind are:
Cost for their fuel hedge. From memory they did hedge a significant amount of fuel they now don't need at a higher cost as it would cost now, which probably means that their fuel bill might continue as if they still would fly all these long haul routes, just with higher fuel costs.
Staff cost - did you consider all the redundancy payments they will need to pay for dropping 30% of their staff?
Parking cost ... not sure what the cost are at New Zealand airports, but some international airlines found that it is cheaper to keep their planes in the air than at the airport. Obviously - I assume that they get a discount for long term parking ... but still, I am pretty sure the cost are not Zero.
Well, as AIR NZ intends to be a smaller company, they should be selling their fleets at moment though sale price should be at large discount. This should give them some cash back to offset their increased parking if you are right.
Another thing you mentioned Cost for their fuel hedge. My understanding is they hedge at, say, $50 per barrel. That means if they go to buy oil, they have to pay $50 per barrel regardless current price only at around $20. But now they don't fly, which means they don't need to buy. So fuel bills should drop significantly.
They have effectively already purchased the Aviation Gas , using futures contracts , options , all sorts of structures .
If you go back on this thread you will see some of the maths and numbers from AIR NZ documentation .
It is not a case of its lower , we don’t need it so we don’t buy it ... they already have the obligation .
Bad thing is if they hedged 6 months usage , at the current and likely usage in the near term how long will it take to use that up ?
They well might need to do that (sell some of their planes). This might provide them with some cash (if they succeed finding an interested buyer, and this is a big IF), however - me shudders if I imagine the write offs they will need to take to balance their books afterwards. The losses they will need to take to get anybody to buy their planes in the current situation will be truly horrible.
Which airline on earth does currently need additional planes?