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Government looking at plans to buy shares in BA and other airlines

Government looking at plans to buy shares in BA and other airlines

Old Mar 21, 20, 5:32 am
  #1  
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Government looking at plans to buy shares in BA and other airlines

https://www.dailymail.co.uk/news/art...us-crisis.html

Good news for BA, bad news for BA shareholders
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Old Mar 21, 20, 5:36 am
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UK Government and Taxpayers send hundreds of millions of pounds to Spanish company is not something the DM would normally approve of.

There are NO BA shareholders. People own shares in IAG. Something the DM appears not to recognise.

Or is the DM advocating nationalising BA without compensation to its owners? Not even the Leader of Her Majesty's Most Loyal Opposition suggested that.
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Old Mar 21, 20, 5:39 am
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Originally Posted by UKtravelbear View Post
UK Governmentand Taxpayers send hundreds of millions of pounds to Spanich company is not something the DM would normally approve of.

There are NO BA shareholders. People own shares in IAG. Something the DM appears not to recognise.

Or is the DM advocating nationalising BA without compensation to its owners? Not even the Leader of Her Majesty's Most Loyal Opposition suggested that.
The story actually originated in the FT but that has a paywall. Bailouts are two way of the course, the company doesn't have to accept it given it will wipe out existing shareholders.
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Old Mar 21, 20, 5:58 am
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Originally Posted by UKtravelbear View Post
UK Government and Taxpayers send hundreds of millions of pounds to Spanish company is not something the DM would normally approve of.

There are NO BA shareholders. People own shares in IAG. Something the DM appears not to recognise.

Or is the DM advocating nationalising BA without compensation to its owners? Not even the Leader of Her Majesty's Most Loyal Opposition suggested that.

sorry you are factually incorrect here and the press are correct. There is one BA shareholder. It is IAG. BA is a subsidiary entity of IAG and a separate legal entity.

It is therefore quite possible that the U.K. government provides new funds - as equity (probably preferred equity with higher voting rights), and dilutes down the IAG stake in BA, possibility to a minority. It would then be - at a later stage - for the U.K. state to decide what to do: Hold, sell back to IAG (if they say had a rights issue), or sell in the market themselves.

BA behaviour so far isnít helping: Cruzís failure to take a salary cut, and the way how BA handles its staff after some clear government messages means that perhaps a government role is more likely - and like the US state involvement in key banks in 2009, the government might decide that participation is compulsory for every systemic player in an industry it provides funds to.
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Old Mar 21, 20, 6:20 am
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Originally Posted by UKtravelbear View Post
Or is the DM advocating nationalising BA without compensation to its owners?
The compensation is that their asset still exists in 2021. 10% of something is bigger than 100% of 0.
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Old Mar 21, 20, 6:41 am
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astute observers will recall that even though not needed, jPMorgan was forced to take US government equity in the 2008/09 bank bail out - with the controls that came with that. Could it be that HM Treasury will be looking at that model?
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Old Mar 21, 20, 6:47 am
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Every private company that accepts public money to get them through the crisis should expect to give something back when things recover, whether in the form of higher corporation tax or the government taking a stake in the company.

In particular, BA has made huge profits in recent years and frittered them all away on salaries, bonuses and dividends. They can't expect something for nothing.
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Old Mar 21, 20, 7:07 am
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I expect international travel to be one of the last sectors to return to normal. After a domestic situation becomes manageable the last thing a government will want to do is import the virus again from overseas.

What IAG/BA management currently believe as realistic may not be in the future.

Any UK government involvement in IAG is likely to be restricted to BA provided it can be ring fenced. I would expect it to be a minority equity stake with perhaps a golden share but IAG obviously has to accept the terms.
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Old Mar 21, 20, 7:11 am
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A point for another day, this, but could the UK government taking a stake in BA result in IAG encountering ownership issues due to the amount of shares owned by a non-EU (from 01 January 2021) party?

Or, would this be a moot point given that ownership of the parent is (presumably) unaffected?
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Old Mar 21, 20, 7:14 am
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BBC News version

This also appeared on the live CV19 thread on BBC News


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Old Mar 21, 20, 7:17 am
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Originally Posted by Rubecula View Post
I expect international travel to be one of the last sectors to return to normal. After a domestic situation becomes manageable the last thing a government will want to do is import the virus again from overseas.
.
I agree, China have now had 3 days of no new domestic cases but enough new cases coming in from overseas visitors.

I wish people would sit still for a while. I know itís tough and unprecedented, maybe you need to get somewhere for emergency purposes but if you donít stay put!

Anyway back to the topic...
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Old Mar 21, 20, 7:50 am
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Originally Posted by rockflyertalk View Post

​​​​​​...
I wish people would sit still for a while
...
I appreciate the sentiment but also understand why people might fly.

​​In times of extreme uncertainty, who wants to be thousands of miles from home and family?

It's bad enough when my adult children are only a few hundred miles away, elderly parents ditto, but at least if really necessary, I have the option to jump in the car...
​​​
It would be absolute torture to be on the other side of the world



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Old Mar 21, 20, 8:58 am
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Originally Posted by OverTheHorizon View Post
I appreciate the sentiment but also understand why people might fly.

​​In times of extreme uncertainty, who wants to be thousands of miles from home and family?

It's bad enough when my adult children are only a few hundred miles away, elderly parents ditto, but at least if really necessary, I have the option to jump in the car...
​​​
It would be absolute torture to be on the other side of the world



​​​​​
​​​​
It is and I am on the other side from my sister and my nephews. So I relate wholeheartedly but I also respect its unprecedented times which calls for these unprecedented measures. I did also add to that statement above that people will need to travel for emergencies, I get that. If itís not essential we have many great apps and software to stay well connected, had this happened 10 years ago it would be a lot tougher for global families/teams/communities.

But I am disgressing from the point of the thread so Iíll shall stop.

I do wonder what BA/IAG post-CV19 era will look like. Will we still have low-cost fares? Will IAG remain IAG or be split...
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Old Mar 21, 20, 9:34 am
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Originally Posted by Misco60 View Post
Every private company that accepts public money to get them through the crisis should expect to give something back when things recover, whether in the form of higher corporation tax or the government taking a stake in the company.

In particular, BA has made huge profits in recent years and frittered them all away on salaries, bonuses and dividends. They can't expect something for nothing.
I would share this sentiment had we been talking about a badly mismanaged company. This is not of the airlines' making. All of this was forced upon them. If we are saying that these measures are implemented for the greater good of the public, then the public should be expected to compensate private businesses for the losses that are imposed upon them. You are absolutely right that the public can't expect something for nothing. If the public expect half of businesses around many countries to close to stop the spread the virus then we, as the public, should be ready to compensate them for that through the governments that represent us. It is only fair. And I expect for the governments to do just that without taking stakes in airlines, hotels, restaurants or bars or other businesses that were basically told to close. They are doing us a favour by sacrificing their livelihoods. It is not a situation where all of these businesses messed up by making wrong commercial decisions and then ran to the government for help. We should be using the correct word here - 'compensation' - rather than a bailout. It is not a situation of 2008-2009 when the financial industry caused the crisis and then needed help from the governments to navigate through it. This crisis was created by the governments, presumably, on behalf of the public.

As far as BA's profits are concerned and what BA is doing with them. First, I don't understand some people's obsession with counting other people or businesses' money. Second, I think BA has a lot of cash. But this situation is not about how much cash any particular company has, even though many don't have enough to survive the next few weeks. This is about a simple fact that you can't keep a business open, incur expenses and pay your staff if you don't have any customers. Therefore, the governments should be compensating every business that had to close for each day that they remain closed with absolutely no strings attached. Same as they should be compensating every person who has lost their job or was forced to take unpaid leave. Again, it is only fair.

Last edited by Andriyko; Mar 21, 20 at 9:39 am
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Old Mar 21, 20, 9:47 am
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Think a few may wish to be careful of what they wish for were the government to acquire shares in BA to keep it running.

​​​​​I know the causes aren't the same, but look at RBS since the government took over - downsized substantially. The government isn't going to buy shares as an act of charity; it wants its money back and to reprivatise. Cost cutting is very much in the government's DNA, after all. Bear in mind that whilst it is right action is taken to prevent a total meltdown, we will end up paying for this in years to come.

In the meantime I don't see BA requiring an imminent bailout and the government likely won't step in unless it really has to. I wouldn't be surprised to see Virgin requiring quick attention however.
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