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Honest opinion : BA will have to be nationalised

Honest opinion : BA will have to be nationalised

Old Apr 30, 20, 9:29 am
  #1  
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Honest opinion : BA will have to be nationalised

I know thereís a whole host of issues with being a public sector airline, I remember more than a few. But closely following COVID19 as we all are, itís becoming apparent that there is no commercial basis for aviation in the UK in 2020. The volume of passengers wonít be there, and the market for travel for business and leisure has vanished.
Until entry to other countries is normalised, passenger carrying aviation is not required. Today HMG is ruling out public gatherings before December, people have lost their jobs as we head into a depression, not just a recession, and yet some on here expect flying to resume this year!

The market size IMHO will be no more than 10% of the same month last year, if that. Money is now being conserved as people are scared. And who is going to spend hundreds of pounds to put themselves at risk in aircraft where one person with a cough is terrifying? Where no inflight service is offered? To go somewhere that is still semi closed with limited hotels and few open attractions? A fraction of BAU.

On that basis, IAG will run out of money well before any recovery that offers real hope of commercial survival. I think in reality, with Virgin going unless Branson steps up, like Rolls Royce before it, BA is too important to any UK recovery to be allowed to fail. I donít see IAG owning BA for much longer. Theyíre a business and thereís no commercial reason for an airline of BAís size before next year at the earliest. Alex Cruz can use the MBA handbook to cut costs and re-org as long as he likes but thereís no passenger revenue stream in sight this year, and anyone thinking about travel is looking to next summer before their next major trip.
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Old Apr 30, 20, 9:38 am
  #2  
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How old are you? You're sounding like someone who is 50+ (as am I, nearly, nothing to be ashamed of!)

I don't see people under 30 thinking like this. They know they are at minimal risk. They also know that, in many cases, time is tight - they could have a gap year coming up, they could be taking time off after university. It's now or never to get out there and see stuff. These people will be out and about as soon as possible.

I don't see care homes organising any overseas trips for their residents for a while, I admit. However, I also see older people who know that their time is limited and would rather take a risk by travelling rather than locking themselves in their house for 2 years, by which point there is a decent chance they will be dead anyway.

Realistically, at any point in time, what % of the population have this disease? Not have HAD it, but currently have it and are infectious. It is tiny. Not nil, but tiny. The odds of someone with it being on your aircraft? Slim. After temperature scanning at the gate? Slimmer still. The odds of them sitting near you? Even slimmer. The odds of you catching it even if they are sat near you? Slimmer still.

And no-one coughing terrifies me, frankly ....

Now, if countries won't open borders or won't let people in without quarantine then it is an entirely different ball game. If people can travel, however, they will. The real risk to BA in this redundancy process is that things could bounce back quickly via a vaccine and the airline would no longer have the staff or slots to service them.

(Your approach may also be coloured by what is happening in your local area. My local Pret is open, as are most of the restaurants and cafes for takeaway. The streets are surprisingly busy. Most of the banks are open. Our cycle shop is open. The uber-luxury chocolates shop is open. The post office is open. My day to day life is little different to how it was when I used to work from home normally, except that my kids weren't under my feet.)

Last edited by Raffles; Apr 30, 20 at 9:50 am
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Old Apr 30, 20, 9:39 am
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Please, 2/3rds of IAG 3 billion pound profit came from BA last year. They (IAG) are ruthless (12k redundancies - aka they finally get to consolidate their fractured contracts/workforce) . They have a healthy balance sheet and one bad year for a company that made billions year upon year doesn't mean the party is over. By 2022 they will be making billions again.
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Old Apr 30, 20, 9:39 am
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Three months ago I would have said you were crazy. Now, not so much.
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Old Apr 30, 20, 9:45 am
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It will only be bailed out/nationalised by the government as an ultimate last resort to stop it going under. Thomas Cook, Monarch and Flybe have ready gone but I do think they would step in for BA.

​​​​​​Also don't bank on jobs etc. being saved if it was nationalised. It will be made profitable by any means possible and gradually returned to the private sector.

​​​​I'd argue the business is doing whatever it can to avoid being nationalised or to take government loans/bailouts at the moment. Not to say it won't happen, but they look keen to avoid it.
​​​​​
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Old Apr 30, 20, 9:50 am
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BA is absolutely not too important to fail.

itís a drop in the ocean in terms of the governmentís balance sheet.

Massive shame (for the employees) if it goes, but there will be other airlines that emerge from this so folk can fly.
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Old Apr 30, 20, 9:52 am
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Okay 2020 and possibly some of 2021 are going to be a little difficult.

But many people are still working I accept that many people are facing a complete change to their lives. Retail will never be the same again and even the big named stores in the UK wont open some stores again.

However the need to travel, the need to see the world has always been part of the life of people globally. Some form of travel will return and being an island a big aircraft is an option that we need.

Once restaurants and pubs open again, people will meet friends and family as before. They will become relaxed about being around other people and air travel will be on the cards again.

The question being what will flights look like. Some are saying they will be more expensive and maybe a little fewer. Sadly I dont think BA will fly the 747's again and I am doubtful the A380 will return to they skys. Routes does New York need an hourly flight meaning slots can be used for other routes.

Maybe I will change my thinking next month but air travel in the future will still be there.
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Old Apr 30, 20, 9:55 am
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Originally Posted by Raffles
However, I also see older people who know that their time is limited and would rather take a risk by travelling rather than locking themselves in their house for 2 years, by which point there is a decent chance they will be dead anyway.
Gee thanks! Iím in no hurry to get fitted for my coffin, but at 75 thatís exactly my thinking ... especially having dodged cancer last year!

However, Iím not anticipating resuming our regular holiday travels this year, or probably even in 2021.
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Old Apr 30, 20, 10:00 am
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BA is not a British airline. Just the wholly owned subsidiary of IAG. For the UK Govt to step in it would have to cease trading and the shareholders would be wiped out. The Govt then creates a newco and purchases the distressed assets from the administrators - if nobody else would do so. Anybody want a knackered 747, an IT system with one careless owner or a 380 unlikely to be full anytime soon? In the long run it could be profitable again and that would certainly arouse private interest at the right price.

Having the ability to get goods and people to key markets is vital to national interest - but BA is not.
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Old Apr 30, 20, 10:01 am
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Originally Posted by Raffles View Post
How old are you? You're sounding like someone who is 50+ (as am I, nearly, nothing to be ashamed of!)
Oi! Am 39 next month and travel is my passion. But market analysis is my profession and airline activity is linked with economic health and open borders. And no, thereís no way I am getting on a long haul flight for a long time, and I say that as someone in employment. Unemployment is about to hit heights no one alive has seen. That becomes a cycle of cash strapped people not flying even when the virus is gone which may be never. So any return to flying begs the question as to how you turn a profit in this market? Any disposable income is likely to be new cars or home improvements rather than the pain of the new norm of sterile flying.

My point is you canít return to profit in that market and there may be no roadmap to doing so. Hence, you either let IAG run out of money, which they will sooner or later, or the state steps in and saves whatís needed to rebuild in the medium term. But in my view, no commercial entity like IAG can wait that long. Itís not that I donít want BA to be a profitable commercial employer, I do. But I think the return to profitability just isnít there in any time period that they can survive.
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Old Apr 30, 20, 10:02 am
  #11  
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Originally Posted by Raffles View Post
How old are you? You're sounding like someone who is 50+ (as am I, nearly, nothing to be ashamed of!)

I don't see people under 30 thinking like this. They know they are at minimal risk. They also know that, in many cases, time is tight - they could have a gap year coming up, they could be taking time off after university. It's now or never to get out there and see stuff. These people will be out and about as soon as possible.

I don't see care homes organising any overseas trips for their residents for a while, I admit. However, I also see older people who know that their time is limited and would rather take a risk by travelling rather than locking themselves in their house for 2 years, by which point there is a decent chance they will be dead anyway.

Realistically, at any point in time, what % of the population have this disease? Not have HAD it, but currently have it and are infectious. It is tiny. Not nil, but tiny. The odds of someone with it being on your aircraft? Slim. After temperature scanning at the gate? Slimmer still. The odds of them sitting near you? Even slimmer. The odds of you catching it even if they are sat near you? Slimmer still.

And no-one coughing terrifies me, frankly ....

Now, if countries won't open borders or won't let people in without quarantine then it is an entirely different ball game. If people can travel, however, they will. The real risk to BA in this redundancy process is that things could bounce back quickly via a vaccine and the airline would no longer have the staff or slots to service them.

(Your approach may also be coloured by what is happening in your local area. My local Pret is open, as are most of the restaurants and cafes for takeaway. The streets are surprisingly busy. Most of the banks are open. Our cycle shop is open. The uber-luxury chocolates shop is open. The post office is open. My day to day life is little different to how it was when I used to work from home normally, except that my kids weren't under my feet.)
I think you are a bit naive if you think everything will just go back to normal. It is irrelevant if the people under 30 think they are at minimal risk. It is all to with having a job. Being able to pay bills.

Whilst I honestly would love for a vaccine to be produced, the birds to sing again with everything back to normal. I doubt this will happen....

Seriously hope I am wrong.
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Old Apr 30, 20, 10:07 am
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Originally Posted by wyddfa View Post
BA is not a British airline. Just the wholly owned subsidiary of IAG. For the UK Govt to step in it would have to cease trading and the shareholders would be wiped out. The Govt then creates a newco and purchases the distressed assets from the administrators - if nobody else would do so. Anybody want a knackered 747, an IT system with one careless owner or a 380 unlikely to be full anytime soon? In the long run it could be profitable again and that would certainly arouse private interest at the right price.

Having the ability to get goods and people to key markets is vital to national interest - but BA is not.
100% wrong.
BA is a British airline with a complex ownership but the AOC is British and the aircraft are all registered here. If things continue as they are, shares in IAG will be worthless very quickly and so shareholder value will be gone anyway.
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Old Apr 30, 20, 10:08 am
  #13  
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Originally Posted by skipness1E View Post
Oi! Am 39 next month and travel is my passion. But market analysis is my profession and airline activity is linked with economic health and open borders. And no, thereís no way I am getting on a long haul flight for a long time, and I say that as someone in employment. Unemployment is about to hit heights no one alive has seen. That becomes a cycle of cash strapped people not flying even when the virus is gone which may be never. So any return to flying begs the question as to how you turn a profit in this market? Any disposable income is likely to be new cars or home improvements rather than the pain of the new norm of sterile flying.

My point is you canít return to profit in that market and there may be no roadmap to doing so. Hence, you either let IAG run out of money, which they will sooner or later, or the state steps in and saves whatís needed to rebuild in the medium term. But in my view, no commercial entity like IAG can wait that long. Itís not that I donít want BA to be a profitable commercial employer, I do. But I think the return to profitability just isnít there in any time period that they can survive.
Whilst some airlines will fail reducing their market share and pushing up prices in the medium term for us all.

You make an interesting point being cars. I think cars and going to change in two different ways. Firstly travel to work wont be on a train or tube. But then will people go into an office as you and many people have been working from your study, dining table or kitchen for the past 5 weeks. In some cases people are saving thousands from not going to the office.

I think where we are in this global crisis its understandable the situation is raw. Time is a healer and people will need some sun or snow or experience in the next couple of years.
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Old Apr 30, 20, 10:09 am
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I think an awful lot of us are viewing 2020 as a complete write off for foreign travel. I can't see my company allowing us to travel this year and I'm certainly not going to be doing any personal travel without insurance to cover CV19 which I'm not going to get.
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Old Apr 30, 20, 10:12 am
  #15  
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Originally Posted by SgtRyan View Post
I think you are a bit naive if you think everything will just go back to normal. It is irrelevant if the people under 30 think they are at minimal risk. It is all to with having a job. Being able to pay bills.

Whilst I honestly would love for a vaccine to be produced, the birds to sing again with everything back to normal. I doubt this will happen....

Seriously hope I am wrong.
Exactly this. The long term damage in this is not the virus, it's the trashing of the global economy as a result. My personal view is that the rubicon has been crossed as far as aviation is concerned, and it will never return to where it was pre-Covid.
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