Only Allah knows about oil prices: Saudi oil chief
http://www.cnbc.com/id/102647881
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Only Allah knows about oil prices: Saudi oil chief
http://www.cnbc.com/id/102647881
2 more dreamliners arriving soon... got me dreaming about what I wish management would do to boost our returns.
1. Sell a 49% stake in the airpoints program - could get at least $400m for it
2. Sell the dreamliners on lease-backs, boost the gearing from current 51% towards 75%, could generate c.$1bn
3. Reduce the cash on balance sheet to $500m from $1.1bn
Return $2bn to shareholder's through a $1.80 per share special dividend.
And doing this would have minimal effect on the stock price because we all value on forward PE or forward EBITDAR or dividend yield...
This stock is bloody undervalued I tell you, if Airpoints is worth $800m which I think it is, and Virgin stake what $400m, and cash on balance sheet of $1b... you are paying $1bn for a company earning well over $250m (ex AP)... So the core business is trading on 4x earnings...
Does anyone want to help me take it private? Jokes aside, if this was run by US management and not government controlled, the CFO would be fired, someone aggressive hired, and the stock double through basic financial engineering that is rife in the US. American Airlines is buying back stock, despite gearing of over 150%...
All ways appreciate your knowledge modandm.
Question, why have they purchased the planes rather than lease -backs as you suggest - are there tax advantages, better deal on price, cheaper overall???
Mo .....most of that $1 billion or whatever in cash isn't really theirs is it. Most is prepaid fares
Even at the time ofbthebbig bail out they prided themselves no the billion in the bank
Financial engineering like this often fills me with a sense of dread since it seems like a short term gain leading to a longer-term cost. Nothing you have suggested seems that extreme though. And it certainly provides a different way of looking at the company.
I do have a couple of questions though:
1. What does selling off an air points gain? I see that Virgin sold off 35% of their programme a while back. How much profit does AP make and can this reasonably be increased by selling it off? Can profit be increased without annoying customers since incentives have now diverged?
2. How sensible is AA's gearing of 150% that you mentioned? Airlines are a low-margin yet volatile business. Profits are can easily be turned to losses by dropping load factor from 85% to 75% (I think). Yet increasing gearing turns a risky business into a very risky business.