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19-05-2020, 03:32 PM
#1581
Originally Posted by BlackPeter
Just wondering how big their profit will be on this base?
2.5% of previous revenue (probably an optimistic guess)
70 to 80% of previous expenses (again - probably optimistic)
What possibly can go wrong?
Revenue drop will not be as severe as that – even during the Level 3 and Level 4 lockdown there were still modest numbers of international and domestic flights and they charge airlines for the privilege of parking on the tarmac. Then there's the rental income from the domestic properties (about 12% of total revenues in the last half year) and a very small amount of revenue from the hotels and retail within the airport (I assume these have not gone all the way to zero). For the current reporting period, there were also the few months before it all went pear-shaped and there may be a small pick up in domestic travel at the end.
Regardless, it would be astonishing if the current half year earnings and cash flow statements didn't include a lot of red ink and numbers in parentheses.
IMHO the current share price assumes a rapid return to something not too far short of the old normal as far as revenue is concerned. I can see a case for a no-quarantine trans-Tasman bubble, similar arrangements with some of the Pacific Islands and possibly travel corridors with places which have very limited local infection rates + a robust testing regime but even the optimist in me sees that as being months away (at best). A return to something approaching the old normal is a long way off (IMHO).
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19-05-2020, 03:36 PM
#1582
Possibly one of the very few airports that might be doing well at the moment: https://www.straitstimes.com/singapo...at-changi-with
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19-05-2020, 03:44 PM
#1583
Originally Posted by macduffy
Not exactly, BP. More like an expectation that aircraft aren't going to go the way of the dinosaurs and that there is a future for air travel, of some sort - and that the planes will need to land some where.
Absolutely. (Some) planes will keep flying. But just do the numbers ... air traffic after 9/11 took 3 years to get back to normal. At that stage it was really just quite irrational fear keeping people away from travelling (just looking at the odds of a plane getting 9/11'ed), not the real risk to catch the virus which currently and likely for a long time will linger around.
No way to avoid sitting on an international flight next to people from Trump land, Boris land or Bolsonaro land to just name the three biggest idiots as example. Infected people will hang around in these countries as well as in the third world for many years to come. These are real risks.
As well - people learnt this time thanks to C-19 that much travel is not necessary. Just as example - I really enjoy these virtual AGM's - no need to spend a day travelling as previously. Virtual conferences are great as well. I expect long term a significant drop in "in the flesh"conferences and I am pretty sure much business travel will in future be considered unnecessary where a Zoom call might do ... which just leaves the question how much lower the new normal will be.
So lets assume it takes this time just 5 years for air travel to get back to its new normal - say 66% of previous traffic. Anybody wants to calculate what Auckland airport is worth under these circumstances? Pretty sure this would under current conditions not even mean break-even.
Last edited by BlackPeter; 19-05-2020 at 03:46 PM.
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"Prediction is very difficult, especially about the future" (Niels Bohr)
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19-05-2020, 04:51 PM
#1584
Originally Posted by BlackPeter
So lets assume it takes this time just 5 years for air travel to get back to its new normal - say 66% of previous traffic. Anybody wants to calculate what Auckland airport is worth under these circumstances? Pretty sure this would under current conditions not even mean break-even.
It's probably a fair bet that if the new normal is 66% of the old, that travel expenses will increase to cover a significant proportion of that short fall, landing expenses being part of that. A lot of the expenses in the industry likely don't have the room to find the efficiencies required to offset such a reduction in headcount. You'd assume (or at least expect) that airline competition would have reduced too at the end of all this (although AIR will be praying there isn't a reset, leaner and meaner Virgin AU). Flights in real terms have come down massively in recent decades. Maybe we're about to see a correction there. If that comes to fruition, it will rub salt into the wounds of those who haven't been able to get a ticket refund and yet will struggle to redeem their credit on similarly priced tickets.
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26-05-2020, 04:51 PM
#1585
Member
People must be expecting a resumption of air travel very soon. AIA has gained 5.4% today.
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26-05-2020, 05:23 PM
#1586
Member
Originally Posted by limmy
People must be expecting a resumption of air travel very soon. AIA has gained 5.4% today.
Funny that MCK just had their presentation, "citing that Trans-Tasman Bubble is still sometime away."
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26-05-2020, 09:36 PM
#1587
I'm going to put it out there and say that in a pool of tough competition, this is the most overvalued share on the NZX.
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26-05-2020, 09:53 PM
#1588
It matter not what the share price is it matter what the quantum of money brought forward is and the support provided by central banks.
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26-05-2020, 09:54 PM
#1589
Originally Posted by JeremyALD
I'm going to put it out there and say that in a pool of tough competition, this is the most overvalued share on the NZX.
havent done details but from a risk perspective yeh I would agree. from utility to rock-star to death star.
For clarity, nothing I say is advice....
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02-06-2020, 02:17 PM
#1590
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