I couldn't agree more. No question the effect on AIR's business and likely effect going forward for the foreseeable future has been and is highly likely to be extremely serious, to put it mildly.
Printable View
Yes, doesn't add up at all. Seems they have tweaked their domestic schedules going to at least July now. Had booked domestic flights for early July back in Feb and just yesterday had the confirmation for schedule change come through. Have been re-booked on slightly earlier flight at no cost to me. So I guess they are heading back towards the new normal, how this plays out is anyone's guess?
There are many shares than confound me with the way they have bounced back off their 23 March lows with apparent wanton disregard for the underlying effect of a new economic reality confronting the company but none more so than AIR. How can a company retaining 75% of its workforce and 100% of its equipment but doing just ~ 10% of its business for the foreseeable future survive in its current form ? The answer clearly is it can't. The second round of wage subsidy will help to some extent but its literally like putting a band aid on a cancer.
Until there is widespread availability of a vaccine people en-masse will deem it unsafe to fly and flying will deteriorate (especially without Koru club access or any inflight service) to something one endures if they must. Sit there with your face mask on, no inflight magazine, no food, water or even a boiled lolly, not even any trolley dolly eye candy...the public response will be, no thanks, I'll drive.
A massive capital raise is an absolute certainty in my opinion...there is simply no question in my mind as to whether they can get through this without one. Timing and pricing are the only unknowns.
History suggests ( post 9/11 capital reconstruction) that the Govt will wait until minority shareholders equity has been almost expunged and then they will leverage their balance sheet to rescue the national airline in the national interest. I see no compelling reason why it will be different this time.
Minority shareholders appear to be on their very own version of a one way financial trip to Mt Erebus. I've seen some photo's of the passengers on that trip and they looked very happy half way there...and we know that didn't end well. Of course when the forward terrain warning system starts sounding (woop woop, pull up, pull up) the Govt will step in before any actual financial crash, but not before they have too. That's how I see it anyway... If others see it differently, good luck to them, I think they'll need it.
Meanwhile on Sharies Facebook page, new post today:
"Air NZ not improving much. Anyone worried?"
Finally got my missing APD refunded after constant emails and phone calls (apparently some 'technical' error on their system).
Spent them immediately ... now have an industrial quantity of wine winging its way to my place.
Still blows my mind how the share price is holding up on this puppy.
There are so many variables that suggest this could be much much worse for minority shareholders than last time, the first being the fact that the government is starting from 53% not 0. The second refers to the fact that while 9/11 was a big hit to the industry when they were last bailed out, it took 3 years to recover according to US transportation data, travel to significant markets could be banned altogether or heavily restricted for that length of time due to covid, let alone recover.
Even if the TT bubble gets up and running in a couple of months (the QLD premier said it could even be Sept before their borders are open), the fact remains that AIR NZ is still sitting here with a number of assets geared towards high long-haul capacity, with near zero demand or ability to use them as they were previously able to.