Implications for A3 of an exit from the Eurozone
#1
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Implications for A3 of an exit from the Eurozone
Any thoughts about A3 operations and general flight operations to, from, and within Greece if there is a banking crisis and Greece defaults on its loans and receives no further bailout cash in Euros?
Mod note: this post originates from the flame-free thread, but as it's likely to promote a discussion that's not appropriate there I've moved to it to its own thread. Please continue to treat it as flame-free when responding.
Mod note: this post originates from the flame-free thread, but as it's likely to promote a discussion that's not appropriate there I've moved to it to its own thread. Please continue to treat it as flame-free when responding.
Last edited by NWIFlyer; Jun 28, 2015 at 12:47 am
#2
Join Date: Jan 2004
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You can't use "thoughts" for planning anything. "Facts", in contrast, are helpful but none are known yet. Finally, a political discussion in the flame-free thread? Asking for trouble (mod interference) once this picks up...
#3
Join Date: Feb 2010
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#4
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Mod note:
As usual, and returning to the guidance given by one of my predecessors as moderator of this forum - Goldcircle - posts should not make reference to the morality or otherwise of Greece settling its debt, or (particularly) overly negative comments about the residents of the country
/Mod note
As usual, and returning to the guidance given by one of my predecessors as moderator of this forum - Goldcircle - posts should not make reference to the morality or otherwise of Greece settling its debt, or (particularly) overly negative comments about the residents of the country
/Mod note
Venture further afield and you begin to see why the Greek Government has put some red lines in place which may well contribute to pushing the country to default: people are suffering, infrastructure work isn't being done, houses are in a state of disrepair, public transport is less than reliable. In spite of all this, the people remain incredibly friendly and welcoming, but they need help, for something to change, to have some control of their own affairs back rather than being hamstrung by a debt the country can't realistically repay and effectively be dictated to by other countries (and let's not forget that the latest payment is owed to the IMF, not the European Central Bank, so effectively this is just switching the debt from one institution to another - it's not really reducing it).
If the other Eurozone countries maintain their current hard line, which seems ever more likely, we may well get a default by Tuesday. It's never happened before, and so we really have no idea what might occur as a result - the ECB could choose to provide some short term funding to prop up the Greek banking system so the country can continue to function, but equally there could be a fairly dramatic collapse of what remains of the Greek economy.
What does that mean to A3? In terms of monetary trading, nothing - many companies, inside and outside the Eurozone, trade in a number of currencies. A3 is bound to have USD, Euro and British Pound accounts at the very least. None of that needs to change (although possibly they might need a Dracma one as well).
Tourism will continue at much the same rate - and might even increase because Greece will become ever better value for foreigners. To balance that, internal flight loads might well decrease sharply, putting significant revenue at risk.
However, A3 has put a lot of effort into promoting the Greek tourist industry, and it might be argued that its increased loads on International flights have been as a result of that. That segment of the business is unlikely to be under threat and should grow if tourism grows. Will it balance the domestic hit? We can't possibly know yet, but I'd be astonished if A3's management doesn't have a plan.
So short term - any threat is extremely small. Longer term, A3 may need to re-align some strategies with whatever the new reality is. There's no reason to think, given past business decisions, why they wouldn't be able to do that.
#5
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Tourism will continue at much the same rate - and might even increase because Greece will become ever better value for foreigners.
However, A3 has put a lot of effort into promoting the Greek tourist industry, and it might be argued that its increased loads on International flights have been as a result of that.
Thanks for the great post NWIFlyer ^
#6
Join Date: Jun 2006
Posts: 5,899
Now, my personal view: at some point, something must give. If you walk round the tourist areas of Athens, you probably wouldn't really know that anything was wrong - streets are clean, infrastructure is maintained, public transport runs regularly and restaurants are busy.
Venture further afield and you begin to see why the Greek Government has put some red lines in place which may well contribute to pushing the country to default: people are suffering, infrastructure work isn't being done, houses are in a state of disrepair, public transport is less than reliable. In spite of all this, the people remain incredibly friendly and welcoming, but they need help, for something to change, to have some control of their own affairs back rather than being hamstrung by a debt the country can't realistically repay and effectively be dictated to by other countries (and let's not forget that the latest payment is owed to the IMF, not the European Central Bank, so effectively this is just switching the debt from one institution to another - it's not really reducing it).
If the other Eurozone countries maintain their current hard line, which seems ever more likely, we may well get a default by Tuesday. It's never happened before, and so we really have no idea what might occur as a result - the ECB could choose to provide some short term funding to prop up the Greek banking system so the country can continue to function, but equally there could be a fairly dramatic collapse of what remains of the Greek economy.
What does that mean to A3? In terms of monetary trading, nothing - many companies, inside and outside the Eurozone, trade in a number of currencies. A3 is bound to have USD, Euro and British Pound accounts at the very least. None of that needs to change (although possibly they might need a Dracma one as well).
Tourism will continue at much the same rate - and might even increase because Greece will become ever better value for foreigners. To balance that, internal flight loads might well decrease sharply, putting significant revenue at risk.
However, A3 has put a lot of effort into promoting the Greek tourist industry, and it might be argued that its increased loads on International flights have been as a result of that. That segment of the business is unlikely to be under threat and should grow if tourism grows. Will it balance the domestic hit? We can't possibly know yet, but I'd be astonished if A3's management doesn't have a plan.
So short term - any threat is extremely small. Longer term, A3 may need to re-align some strategies with whatever the new reality is. There's no reason to think, given past business decisions, why they wouldn't be able to do that.
Venture further afield and you begin to see why the Greek Government has put some red lines in place which may well contribute to pushing the country to default: people are suffering, infrastructure work isn't being done, houses are in a state of disrepair, public transport is less than reliable. In spite of all this, the people remain incredibly friendly and welcoming, but they need help, for something to change, to have some control of their own affairs back rather than being hamstrung by a debt the country can't realistically repay and effectively be dictated to by other countries (and let's not forget that the latest payment is owed to the IMF, not the European Central Bank, so effectively this is just switching the debt from one institution to another - it's not really reducing it).
If the other Eurozone countries maintain their current hard line, which seems ever more likely, we may well get a default by Tuesday. It's never happened before, and so we really have no idea what might occur as a result - the ECB could choose to provide some short term funding to prop up the Greek banking system so the country can continue to function, but equally there could be a fairly dramatic collapse of what remains of the Greek economy.
What does that mean to A3? In terms of monetary trading, nothing - many companies, inside and outside the Eurozone, trade in a number of currencies. A3 is bound to have USD, Euro and British Pound accounts at the very least. None of that needs to change (although possibly they might need a Dracma one as well).
Tourism will continue at much the same rate - and might even increase because Greece will become ever better value for foreigners. To balance that, internal flight loads might well decrease sharply, putting significant revenue at risk.
However, A3 has put a lot of effort into promoting the Greek tourist industry, and it might be argued that its increased loads on International flights have been as a result of that. That segment of the business is unlikely to be under threat and should grow if tourism grows. Will it balance the domestic hit? We can't possibly know yet, but I'd be astonished if A3's management doesn't have a plan.
So short term - any threat is extremely small. Longer term, A3 may need to re-align some strategies with whatever the new reality is. There's no reason to think, given past business decisions, why they wouldn't be able to do that.
Being involved makes it more personal but lucky my Family are somewhat protected and consider themselves lucky. They are by no means rich but made wise choices and investments. Only for that then it would be a totally different story.
I am in daily contact with friends and relatives there and so far despite the news reports its calm. Yes there were lines at ATM's but it was in no way a rush on the banks. It was a steady orderly affair. Some ATMs ran out of money but the banks have been making arrangements to have them replenished. One ATM was empty and people went to another down the street which still had cash. Last night none of my folks had issues drawing out cash.
Back to the main subject for implications for A3 ironically they are set to win from this. Tourism will increase as a devalued Drachma will be great for tourists coming from the STG area and indeed the Euro zone. It will be the best place in the Med to take your hols. A3 would benefit from taking in Euro/USD and paying their bills at ATH in Drachma and of course A3 have Euro/USD accounts. They are more aware than most of the implications and have been planning for this outcome of a Euro exit.
#7
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I am in daily contact with friends and relatives there and so far despite the news reports its calm. Yes there were lines at ATM's but it was in no way a rush on the banks. It was a steady orderly affair. Some ATMs ran out of money but the banks have been making arrangements to have them replenished. One ATM was empty and people went to another down the street which still had cash. Last night none of my folks had issues drawing out cash.
Tomorrow capital constraints will most likely be added, allowing only a small amount to be withdrawn per day. That may be enough to cover daily expenses, but will not allow larger purchases like airfare and/or accessing savings.
And just like people in Greece worry about their savings, the same would apply to Aegean I imagine. Yes they may have dollar accounts but they still do business with Greek banks. If those are not stable, Aegean cannot have a stable operation either. They have to rely on the banks in the region they operate out of.
In case of a default there will be many things that would affect Aegean from operating. Monetary traffic will be severely limited; making dealings with the pax, but also the airports, supply companies and freight companies very difficult. Especially if pax cannot take out money to pay for tickets, its going to be very difficult to fill the planes.
And even if they are able to operate, there are other obstacles. Fuel will likely become very expensive (gasoline, but I would assume jet fuel as well) to the extend that it may not be profitable to operate. And how about pax that are not able to physically reach the airport due to gasoline shortages, lack of public transport, and so on. I know that I personally would be severely impacted by such, relying heavily on long-distance public transport to reach any airport.
Last edited by Xandrios; Jun 28, 2015 at 4:47 am
#8
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Longer term having a chunk of your costs in the new drachma but revenue largely priced in hard currency should be a help with international routes, as would the likely pick up in tourism. Short term with banking turmoil and the uncharted waters of exiting the Euro things might be very bumpy. However I am certainly not panicking about my miles or status just yet.
#9
Join Date: Jun 2006
Posts: 5,899
To be honest these are all speculation as this is a unique situation and no one really knows what will happen on the ground when the sun rises and Greeks are back in the Drachma. Better get it over with than more years of deadlines and prolonging the death. Its a ticking time bomb that just can't be sustained within Euro Zone membership anymore. Yes depending on your finances and situation one Greek will be worse off or better off than another but thats life.
Airlines in third world countries operate and use EUR/USD so A3 would not be any different. There maybe an initial confusion and adjustment period but it would quickly level out and become stable again in the new environment. Payments from A3's accounts in Germany can be made electronically to companies without even touching Greek soil. A3 passengers are mostly tourists during the June-Sept period and Greeks returning home so their tickets are paid for in EUR/CHF/GBP/USD etc... no issues with paying for tickets. Thats why it needs to happen now so by the end of the season it would all be done and dusted and if any adjustments are needed to take domestic payments they are in place and working.
Airlines in third world countries operate and use EUR/USD so A3 would not be any different. There maybe an initial confusion and adjustment period but it would quickly level out and become stable again in the new environment. Payments from A3's accounts in Germany can be made electronically to companies without even touching Greek soil. A3 passengers are mostly tourists during the June-Sept period and Greeks returning home so their tickets are paid for in EUR/CHF/GBP/USD etc... no issues with paying for tickets. Thats why it needs to happen now so by the end of the season it would all be done and dusted and if any adjustments are needed to take domestic payments they are in place and working.
#10
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Not sure if I agree with you here. From what people here expect it seems that people who have been carefully spending, saving money over the years, are going to lose much of that. While people who have spent it all will not lose anything. I don't consider being punished for having a careful lifestyle 'a fact of life'..
#11
Join Date: Jun 2006
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Not sure if I agree with you here. From what people here expect it seems that people who have been carefully spending, saving money over the years, are going to lose much of that. While people who have spent it all will not lose anything. I don't consider being punished for having a careful lifestyle 'a fact of life'..
#12
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Not sure if I agree with you here. From what people here expect it seems that people who have been carefully spending, saving money over the years, are going to lose much of that. While people who have spent it all will not lose anything. I don't consider being punished for having a careful lifestyle 'a fact of life'..
The strange thing is we don't even know how foreign deposits will fare, I have heard rumors that Greek assets abroad could even be frozen or seized to repay for the debt, there is no certainty how the Europeans may try to recoup debts.
Last edited by nk15; Jun 28, 2015 at 8:16 am
#14
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So, the ECB has decided not to increase the ELA, so as to avoid further exposure risk and pressure the Greek government. It will be hard not to have capital controls tomorrow. There are already unofficial capital controls, as banks have set a limit of 3-5k daily in transactions. But we may have even stricter ones on Monday. ATMs in my hometown have been emptied since yesterday noon, and only the ones in Athens central locations are being restocked (also for tourists). Since this week could be a "transition" week, if you are traveling to Greece you should have some cash, just in case banks close for a couple of days or so. But I would think that even if there are capital controls, you should still be able to withdraw at least $300/day (it may be higher for tourists), as it would be very stupid not to allow tourists to access funds that they will spend in the country.
#15
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The question does not relate to what is happening now but what the implications are if Grexit occurs.
Whether that causes an influx of foreign tourists as people who would not otherwise travel to Greece do so because its new currency, perhaps the Drachma, is cheap, is only one side of the coin.
A3 would need to purchase fuel and pay for services at stations outside Greece in local currency. That would mean that A3 would have to make those purchases in Euros. The open question would be whether foreigners making A3 ticket purchases in EUR, US$ or whatever, would offset purchases by Greek residents made in Drachmas.
That level of visibility would require more than a chrystal ball.
Whether that causes an influx of foreign tourists as people who would not otherwise travel to Greece do so because its new currency, perhaps the Drachma, is cheap, is only one side of the coin.
A3 would need to purchase fuel and pay for services at stations outside Greece in local currency. That would mean that A3 would have to make those purchases in Euros. The open question would be whether foreigners making A3 ticket purchases in EUR, US$ or whatever, would offset purchases by Greek residents made in Drachmas.
That level of visibility would require more than a chrystal ball.