Originally Posted by
San Gottardo
Except that "opportunity cost" doesn't require cash. Refurbishing a plane does. I don't know how they treat those programs from an accounting perspective, but I assume those cabins are depreciated over time, so the net income impact can be "buffered" (calling Professor brunos for help). But Air France still needs to pay the invoice of the company doing the refurbishment. Even if things turn out very well and airline travel rebounds then all the revenue generated then will be needed to pay off huge debt (looks like the French and Dutch governments will guarantee some massive loans), and reduce the FY loss. And on the cash side, it will be kept to (re-)create a buffer after current cash reserves are depleted in the months of March-May.
So the best thing we can hope for is that AF sends the non-refurbished planes to the desert (A380, A340, the NEV4-777s) and only keeps the refurbished ones flying. That way the likelihood of being on a plane with a refurbished cabin will increase dramatically.
I fully agree with you. Accounting conventions have little relevance today, so I won't comment on accounting.
It is interesting to see how airlines are being bailed out in different countries.
Many countries logically seem to direct funding/bailout to the companies themselves, often with strings attached regarding employment. The companies are the employers. It seems logical and giving them more flexibility to go that route. France seems to be subsidizing employees directly, at some minimum level. Hence, more funding will be needed for a lot of French companies. As typical in a former socialist State, France is talking about nationalizing Air France. If we see what is happening with SNCF, this does not seem like a great idea. In any case,AF will need to severely downsize as the next couple of years will be tough. A fifty percent capacity in 2021 compared to 2019 might be a reasonable plan, unless some health miracle happens.
Just my usual controversial two cents.