Originally Posted by
Blue Skies
You're probably right, but there's a yawning gap between the position US airlines & AIR find themselves in.
As Gregg Foran said last Friday on radio interview, 2/3rds of AIR revenue was International & thats all gone. ( a significant part of that was US routes which won't be back anytime soon, not a lot of profit in Trans Tasman)
Domestic accounts for only 1/3rd of their revenue so that's all they've got to 'revive, survive & thrive' (nod to the marketing dept) on.
At mo Domestic is operating on about 30% of normal & they are aiming to achieve 50% before the end of the year.
There seems to be a perception amongst recent AIR investors that the airline is too important to NZ to be allowed to fail, so their investment is completely safe. This was stated to me again this morning by a recent investor.
Foran stated AIR will need the Govt loan within months & will need all of it.
As I understand it, the Govt loan is 'convertible' so if AIR are unable to repay it, the Govt will convert the loan to shares in the remaining 48% on AIR they don't already own, severely diluting the value of other shareholders shares. I suppose the Govt could write off the $900M loan but can't really see that being a politically acceptable option, bailing out private 'wealthy' shareholders with tax payers money when Health Education Housing etc will be crying out for money.
Is that the way others more informed than myself see it?