IAG 1st Quarter Results

Old May 7, 20, 1:43 am
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IAG 1st Quarter Results

https://www.iairgroup.com/~/media/Fi...031%202020.pdf

A few headlines:
- 2020 Capex cut by $1.2b
- Currently planning meaningful return to service in July
- Don't see demand recovering to 2019 levels until 2023
- Accessing UK CCFF funding
- Air Europa acquisition proceeding but will require price adjustment
- No comment on jobs consultations - process in Spain & Ireland as per law
- 737 MAX LOI unchanged
- Willie Walsh stepping down September at AGM
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Old May 7, 20, 1:49 am
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Originally Posted by pauldb View Post
https://www.iairgroup.com/~/media/Fi...031%202020.pdf

A few headlines:
- 2020 Capex cut by $1.2b
- Currently planning meaningful return to service in July
- Don't see demand recovering to 2019 levels until 2023
- Accessing UK CCFF funding
- Air Europa acquisition proceeding but will require price adjustment
- No comment on jobs consultations - process in Spain & Ireland as per law
- 737 MAX LOI unchanged
- Willie Walsh stepping down September at AGM
So contrary to popular belief, they have accessed the UK loan scheme. Also currently burning through EUR200m per week, if anyone was in any doubt that sitting on a large cash pile helps them that much...it only buys them a few more months than the other big players who now have government support behind them.
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Old May 7, 20, 1:54 am
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Interesting to hear they see meaningful travel return in July, but signs from UK government is that international borders will be last to re-open and talks of 14 day quarantine to be introduced.
So July might be too optimistic, in fact it definitely is.
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Old May 7, 20, 1:57 am
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Originally Posted by stevie View Post
Interesting to hear they see meaningful travel return in July, but signs from UK government is that international borders will be last to re-open and talks of 14 day quarantine to be introduced.
So July might be too optimistic, in fact it definitely is.
The actual quote is:

We are planning for a meaningful return to service in July 2020 at the earliest, depending on the easing of lockdowns and travel restrictions around the world
So I read that as if everything works out perfectly from now, then July is possible, and meaningful might only mean 25% of existing capacity?
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Old May 7, 20, 1:58 am
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Originally Posted by jonas123 View Post
So contrary to popular belief, they have accessed the UK loan scheme. Also currently burning through EUR200m per week, if anyone was in any doubt that sitting on a large cash pile helps them that much...it only buys them a few more months than the other big players who now have government support behind them.
Even while objecting to bail outs, it would be surprising and negligent if they didn't apply for access to extra, cheaper liquidity.

Results webcast at 9am, i.e. now: https://edge.media-server.com/mmc/p/7xws8ap8
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Old May 7, 20, 2:17 am
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Originally Posted by stevie View Post
Interesting to hear they see meaningful travel return in July, but signs from UK government is that international borders will be last to re-open and talks of 14 day quarantine to be introduced.
So July might be too optimistic, in fact it definitely is.
According to BBC news they go on to say...

However, IAG - which also owns Iberia and Aer Lingus - said these plans were "highly uncertain", and were subject to various travel restrictions.
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Old May 7, 20, 2:32 am
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Originally Posted by pauldb View Post
https://www.iairgroup.com/~/media/Fi...031%202020.pdf

A few headlines:

- Currently planning meaningful return to service in July
- Don't see demand recovering to 2019 levels until 2023
- AGM
unfortunately Walsh comments on the report mean that 2023 is the earliest a return to last years levels could be hoped for and I think they are expecting it to take a lot longer than that
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Old May 7, 20, 3:43 am
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Given the sheer scale of BA operations, and its global reach, the latest 1st Qtr results statements have - not surprisingly - attracted much interest and comment from financial analysts,

This from Bloomberg ...........

(Bloomberg) -- British Airways parent IAG SA tapped U.K. government-backed loans to boost liquidity, in a sign of the damage wrought by the coronavirus on even the industry’s strongest players.

IAG accessed 300 million pounds ($371 million) from the Coronavirus Corporate Finance Facility in the second week of April, it said Thursday, taking state-supported funding to $1.45 billion including Spanish backing. The group, which initially signaled it wasn’t seeking aid, said it’s essentially grounded until July, when it’ll start restoring flights.

and

Walsh initially said IAG wasn’t applying for bailouts and earlier in the year opposed a proposal to help now-defunct Flybe, one of the virus’s first airline victims. He said in March he thought airlines should be expected to “look at self-help before they would call on governments to provide state aid.”
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Old May 7, 20, 4:20 am
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The markets are not liking the Q1 results.

IAG share price is now is down 4.4% today, taking it below 190p for the first time since 2012.
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Old May 7, 20, 4:25 am
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Originally Posted by milkyway88 View Post
The markets are not liking the Q1 results.

IAG share price is now is down 4.4% today, taking it below 190p for the first time since 2012.
Isnīt this normal, that share price goes down on results day?

Buy the rumor, sell the news
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Old May 7, 20, 4:26 am
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I suppose the question is where the line between applying for government-backed funding and publicly soliciting a bail-out of a private entity lies. IAG drew down government underwritten loans, it has not taken directly from the tax payer. The SRB/Virgin pleas was for a £500 million pound loan on commercial terms, but provided by HMG. To me IAG is being opportunistic and opaque with the finer details to pursue an agenda. They are clearly trying to weaken the competition and reduce their own cost base. The optics on this aren't great and does make them look two-faced. But it is a fight for survival right now and the IAG strategy is to be the last man standing. There are a lot of bad options here.
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Old May 7, 20, 4:37 am
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Originally Posted by BrianDromey View Post
I suppose the question is where the line between applying for government-backed funding and publicly soliciting a bail-out of a private entity lies. IAG drew down government underwritten loans, it has not taken directly from the tax payer. The SRB/Virgin pleas was for a £500 million pound loan on commercial terms, but provided by HMG. To me IAG is being opportunistic and opaque with the finer details to pursue an agenda. They are clearly trying to weaken the competition and reduce their own cost base. The optics on this aren't great and does make them look two-faced. But it is a fight for survival right now and the IAG strategy is to be the last man standing. There are a lot of bad options here.
That's not correct. The CCFF money is raised by HMG directly buying bonds issued by corporates. It is NOT a Government guarantee for a loan made by a commercial bank. The £300m has come directly from your pocket.
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Old May 7, 20, 5:26 am
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There's a strong argument that IAG did "look at self-help before they would call on governments to provide state aid" and is spending much of its own cash reserves as well as having the government buy bonds.

How senior is the HM Government debt? If HM Government has first call on BA's assets if the company fails, they would be in a good position to recoup £300m from the capital assets of the airline.
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Old May 7, 20, 5:36 am
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Originally Posted by Raffles View Post
That's not correct. The CCFF money is raised by HMG directly buying bonds issued by corporates. It is NOT a Government guarantee for a loan made by a commercial bank. The £300m has come directly from your pocket.
I misinterpreted how the scheme works. In that case I think itís pretty poor of IAG to concurrently take money on one had while denying BA is going to be bailed out. Its a reflection of how ruthlessly results driven IAG is.
The counter argument is that the IAG group has taken 1.5 billion Euro in government loans, both other European groups have taken 10billion each. Which is better for the taxpayer in the medium term?
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Old May 7, 20, 5:50 am
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Originally Posted by Raffles View Post
That's not correct. The CCFF money is raised by HMG directly buying bonds issued by corporates. It is NOT a Government guarantee for a loan made by a commercial bank. The £300m has come directly from your pocket.
Thatís not quite correct either. Like all the special measures, the CCFF money is being borrowed by HMG and that borrowing will be repaid by HMG when BA repays HMG.

The £300m will only come from your pocket if BA defaults, in the sense that the taxpayer would have to repay the borrowings or forever pay interest on. And thatís exactly what the picture would look like with a guarantee that got called upon.
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