Telling for me is $1.1B in funds left...... (including govt facility). So actually $200m left and going to be dipping into it soon. Unless they do a CR.
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Telling for me is $1.1B in funds left...... (including govt facility). So actually $200m left and going to be dipping into it soon. Unless they do a CR.
With cash of only around $200m and burning through $ 175m per month in recent months but forecasting to get that down to $65-85m, we can assume they run out of cash in about 2 months, without a capital raise or Government loan. A decision surely is looming on the CR.
"Short-term liquidity as at 25 August 2020 was approximately $1.1 billion, made up of cash and the $900 million standby loan facility from the New Zealand Government. Due to the strong cash position pre-Covid-19, swift action taken by management to reduce cash burn and a better than expected return of domestic demand after the initial lockdown was lifted in New Zealand, the airline has not yet utilised the standby loan facility. However, it expects to start drawing on these funds in the coming days."
Looks like they already have run out of cash.
Wow just $200 M left at the end of June. Burnt through $85 M of that in July & another $85 M in August, no wonder needing to draw down of that govt loan within days.
I think 200m left by 25th of August.
Still have $800m plus of fares paid in advance (or waiting for refunds) and over $400m for expected loyalty travel / points
Total Equity left as at 30 June 2020 $1,318m.
Annual Depreciation and amortization last year (excludes abnormal write down on 777-200's) $841m = $70m per month
Predicted cash burn at mid point of range going forward $$75m per month.
Total of cash burn and depreciation and amortization $145m per month.
1318 / 145 = 9.1 months before all equity will be expunged as at 30/06/2020 = 7.2 months from today's date.
NTA as at 30/06/2020 was $1.01. With estimated losses since of circa $290m I estimate the current NTA is about 75 cents.
My conclusion.
The company is almost certainly going to need to raise capital in the next 7 months otherwise it will be insolvent and in a negative equity situation.
I believe the prudent thing to do would to have been to raise equity now.
I think its politically inconvenient for the Govt to do so because some of its voter base would think the Govt is supporting capitalism.
Raising equity later runs the very real risk of trying to raise capital from an extremely weak desperate financial position and the risk of a repeat of the extremely deeply discounted capital raise after 9/11 at 25 cents is very real.
If anyone thinks this is an investable proposition at the current share price I very strongly recommend you take professional advice.