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Max Q
Topic Author
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Airlines cash reserves

Wed Apr 22, 2020 3:10 pm

Covid 19 has been devastating for the airline business, in the US government aid is helping many carriers to weather the storm


Having said that it’s troubling to see what relatively low cash positions most American
airlines have


No company can expect to survive long with minimal or no revenue but for years we’ve seen billions spent on massive stock buy backs, that strategy isn’t helping right now


These billions could have been spent lowering debt and building cash reserves. Most financial planners recommend a six month rainy day fund


Why not the airlines too?


I think this current government aid should all be converted to outright grants with the condition that when profits return all carriers must start putting aside enough cash to build an emergency fund sufficient to pay all expenses for a minimum of 6 months without income before being granted further aid

But for those billions spent on stock buy backs this could easily have been done over the last few years
The best contribution to safety is a competent Pilot.


GGg
 
MIflyer12
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Re: Airlines cash reserves

Wed Apr 22, 2020 4:22 pm

It's not an American thing: look at the pre-COVID cash/short term reserves of AFKL or LH group. It's all public info. Ratios of cash to revenue are comparable.

The decline in revenues is both unprecedented in scale, and unforeseen.

Max Q wrote:

No company can expect to survive long with minimal or no revenue but for years we’ve seen billions spent on massive stock buy backs, that strategy isn’t helping right now


These billions could have been spent lowering debt and building cash reserves. Most financial planners recommend a six month rainy day fund


Why not the airlines too?


Hmm - capitalism? Return On Invested Capital is accepted as a key metric. Ten of Billions of $ just sitting around waiting for a very low probability catastrophe isn't a productive use of assets. Have you and all of your neighbors lifted your houses 100 meters about ground level in case of a really, really big flood?

Banking and insurance commonly have mandated leverage ratios because financial stability IS the product. Most other lines of business are left to manage reserves as they see fit.
 
dca1
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Re: Airlines cash reserves

Wed Apr 22, 2020 5:29 pm

anyone have any credible data indicating which US airlines are in the best cash position to weather this crisis?
 
MrPeanut
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Re: Airlines cash reserves

Wed Apr 22, 2020 5:48 pm

No business is structured to sustain shut downs or significant decreases in business for extended periods of time. After a large event happens, Monday morning quarterbacks love to come out in droves to point fingers on what should or should not have been done. The financial planners that recommend 6 months worth of rainy day funds pertain to individuals, not businesses because in theory businesses don’t shut down for extended periods of time. Just like no one foresaw 9/11 and prepared for that, no one foresaw this event from happening and could have possibly prepared for this.
 
Lootess
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Re: Airlines cash reserves

Wed Apr 22, 2020 5:52 pm

No publicly traded business should ever leave all their net earnings in the bank, that just makes them a possible takeover target along with potential future losses as money should be reinvested into the business and employees. New terminals, aircraft investment, money to sustain new hub/market potential, etc. Which DL has done, did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?

The amount of money in their coffers would have withstood another 9/11 type of event, but a virus like this is hardly something you can plan for when booking reach negative levels. It's called no business.
 
Max Q
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Re: Airlines cash reserves

Wed Apr 22, 2020 6:28 pm

MrPeanut wrote:
No business is structured to sustain shut downs or significant decreases in business for extended periods of time. After a large event happens, Monday morning quarterbacks love to come out in droves to point fingers on what should or should not have been done. The financial planners that recommend 6 months worth of rainy day funds pertain to individuals, not businesses because in theory businesses don’t shut down for extended periods of time. Just like no one foresaw 9/11 and prepared for that, no one foresaw this event from happening and could have possibly prepared for this.



No Monday morning quarterbacking here. I’ve been saying this for years and on this forum
The best contribution to safety is a competent Pilot.


GGg
 
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airportugal310
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Re: Airlines cash reserves

Wed Apr 22, 2020 6:51 pm

Lootess wrote:
No publicly traded business should ever leave all their net earnings in the bank, that just makes them a possible takeover target along with potential future losses as money should be reinvested into the business and employees. New terminals, aircraft investment, money to sustain new hub/market potential, etc. Which DL has done, did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?

The amount of money in their coffers would have withstood another 9/11 type of event, but a virus like this is hardly something you can plan for when booking reach negative levels. It's called no business.


hope they enjoyed it, because its the last one anyone's getting for a long while
“They bought their tickets, they knew what they were getting into. I say, let 'em crash.”
 
Sokes
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Re: Airlines cash reserves

Wed Apr 22, 2020 7:25 pm

Lootess wrote:
No publicly traded business should ever leave all their net earnings in the bank, that just makes them a possible takeover target along with potential future losses as money should be reinvested into the business and employees. New terminals, aircraft investment, money to sustain new hub/market potential, etc. Which DL has done, did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?

I don't understand what you mean.

Usually we discuss here on a.net if it's o.k. that Boeing has more obligations than assets (= negative equity).
I believe to expect companies to keep nearly 50% of GDP as cash reserves is overdoing it.
Why can't the world be a little bit more autistic?
 
CriticalPoint
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Re: Airlines cash reserves

Wed Apr 22, 2020 7:29 pm

Max Q wrote:
Covid 19 has been devastating for the airline business, in the US government aid is helping many carriers to weather the storm


Having said that it’s troubling to see what relatively low cash positions most American
airlines have


No company can expect to survive long with minimal or no revenue but for years we’ve seen billions spent on massive stock buy backs, that strategy isn’t helping right now


These billions could have been spent lowering debt and building cash reserves. Most financial planners recommend a six month rainy day fund


Why not the airlines too?


I think this current government aid should all be converted to outright grants with the condition that when profits return all carriers must start putting aside enough cash to build an emergency fund sufficient to pay all expenses for a minimum of 6 months without income before being granted further aid

But for those billions spent on stock buy backs this could easily have been done over the last few years


Unless you can put a 100% complete and total stop to corporate raiding companies will always be highly leveraged with little cash on hand...it’s the only way to protect themselves. Also money in the bank is a waste any good company worth it’s salt makes and carries investments.
 
Sokes
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Re: Airlines cash reserves

Wed Apr 22, 2020 7:40 pm

airportugal310 wrote:
Lootess wrote:
... did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?
...


hope they enjoyed it, because its the last one anyone's getting for a long while


"Friday, March 27, 2009 ...
The public was furious at the recent news that American International Group, which had been rescued by commitments of up to $ 180 billion in taxpayer money, was paying $ 165 million in bonuses to executives and traders at the division that had nearly caused the company to collapse the previous September."
Simon Johnson and James Kwak, 13 Bankers, 2010

While psychopaths know no empathy or feeling of responsibility, they have the capacity to work together. Mafia is one example, politicians and bankers another one.
Let's see if same will be true for big business.
Why can't the world be a little bit more autistic?
 
Airlinerdude
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Re: Airlines cash reserves

Wed Apr 22, 2020 7:43 pm

Simply put, there's never been an incentive to do so.

The two most influential factors I've witnessed are:
1. Management compensation being highly influenced by bettering the stock price.

One aspect of this is that management has little incentive to keep cash around when they could be paying out dividends and undertaking share buybacks to increase the stock price. The second is, the market loves seeing expansion since it signifies earnings growth in the future. So why not keep pouring money into expansion?

2. Cheap and easily accessible debt.

Debt has been cheap since 2008. Simply put, why not borrow at 5% when you could make a 7% ROI by investing this money? Debt covenants have never been structured in a way that demands so much excess cash on the balance sheet, thus there's never been an incentive to keep it around.
 
Lootess
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Re: Airlines cash reserves

Wed Apr 22, 2020 8:19 pm

Sokes wrote:
airportugal310 wrote:
Lootess wrote:
... did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?
...


hope they enjoyed it, because its the last one anyone's getting for a long while


"Friday, March 27, 2009 ...
The public was furious at the recent news that American International Group, which had been rescued by commitments of up to $ 180 billion in taxpayer money, was paying $ 165 million in bonuses to executives and traders at the division that had nearly caused the company to collapse the previous September."
Simon Johnson and James Kwak, 13 Bankers, 2010

While psychopaths know no empathy or feeling of responsibility, they have the capacity to work together. Mafia is one example, politicians and bankers another one.
Let's see if same will be true for big business.


Comparing Delta to AIG is foolish, the money went to all frontline employees and they got painted names on a plane to boot. Investors got a return, everyone did. Stock bonuses have been given away company-wide for years. The government actually made interest money from the 9/11 TSB loan guarantees that were repaid. When the virus goes away the government will make money again, and airlines will be glad to get rid of that debt since it comes with strings attached. Just like how all the banks were happy to get rid of treasury investments with strings attached from the mortgage crisis. The government made money from that too.

Not to mention Delta was working very hard to get back to investor grade, and with that comes favorable debt terms. When you start drifting down back in the bad letters, incentive to carry on deep debt doesn't come favorably.
 
GalaxyFlyer
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Re: Airlines cash reserves

Wed Apr 22, 2020 9:31 pm

First, individuals and families have only one or two sources of revenue—aka work. Businesses depend on millions of sources of revenue-customers, cargo, ancillary businesses like training, MRO. So, they don’t need 6-month cash reserves for the unprecedented liquidation of all revenue. Second, with interest rates in less than 1% range, there has to be a better investment for all that cash. Investors would livid if DL has six months, say $15 billion in a savings account for a 1 in 50 year event and rightly so.
 
Kilopond
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Re: Airlines cash reserves

Wed Apr 22, 2020 11:06 pm

Lootess wrote:
No publicly traded business should ever leave all their net earnings in the bank, that just makes them a possible takeover target [...]


Under certain jurisdictions those publically traded companies are/were obligated by law to accumulate a part of their profits into reserves. That money had been accounted as "assets". Do you remeber the failed Air Berlin? They legally moved from the FRG to the UK and morphed into a PLC in order to get rid of "anti-buisiness regulations".
 
hiflyeras
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Re: Airlines cash reserves

Wed Apr 22, 2020 11:13 pm

SIlly me...from the title of this thread I assumed that someone would have actually answered the question with a list of cash on hand for the world's major airlines.
 
umichman
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Re: Airlines cash reserves

Wed Apr 22, 2020 11:18 pm

The airlines have covenants with the credit card companies to have a certain amount of cash on hand so the credit card companies don't get stiffed if they suddenly have to refund a bunch of tickets (as we are seeing right now). I would expect those requirements to increase once the airlines get back on their feet. Some of the comments here are a bit silly. Certainly not all companies are highly leveraged (including some airlines like Southwest). And then there are tech companies like Apple and Microsoft that have very significant cash hoards. Their share price valuations reflect a combination of their profitability and their assets. So no, simply have a large pot of cash does not make you ripe for a takeover as it's not like you can take them over for less than their cash on hand. It's unlikely an airline could ever get into the position of a Apple or Microsoft as it's very difficult for an airline to maintain the kind of profit margins that tech does (and you can bet there would be a lot of grousing about ticket prices if they could actually manage that).
 
Sokes
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Re: Airlines cash reserves

Thu Apr 23, 2020 3:25 am

company management:
We shouldn't keep cash reserves for rainy days as this would make us a takeover target.
woman:
I shouldn't dress nice or have beautiful hair as this might make me attractive for a union with a man.
Why can't the world be a little bit more autistic?
 
dstblj52
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Re: Airlines cash reserves

Thu Apr 23, 2020 4:27 am

Sokes wrote:
Lootess wrote:
No publicly traded business should ever leave all their net earnings in the bank, that just makes them a possible takeover target along with potential future losses as money should be reinvested into the business and employees. New terminals, aircraft investment, money to sustain new hub/market potential, etc. Which DL has done, did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?

I don't understand what you mean.

Usually we discuss here on a.net if it's o.k. that Boeing has more obligations than assets (= negative equity).
I believe to expect companies to keep nearly 50% of GDP as cash reserves is overdoing it.

The problem is that if a company has a lot of cash or assets it's really easy to do something like the leveraged buyouts that happened to NWA.
 
United1
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Re: Airlines cash reserves

Thu Apr 23, 2020 5:05 am

hiflyeras wrote:
SIlly me...from the title of this thread I assumed that someone would have actually answered the question with a list of cash on hand for the world's major airlines.


Right now that list would be almost impossible to come up with and would be out of date as soon as it was posted. All of the major carriers are scrambling to raise funds while at the same time literally hemorrhaging cash. Would love to be able to answer your question but it’s just to volatile an environment right now.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
eurotrader85
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Re: Airlines cash reserves

Thu Apr 23, 2020 5:16 am

As mentioned by numerous persons in this feed, we are talking about companies here whose job is to deliver the demands of and returns to shareholders. Not public service obligators who must deliver come rain or shine. Management boards that do not deliver shareholders expectations will be moved on. These shareholders in turn have their own interests, for instance if they are a pension fund, they will need to deliver cash from dividends to deliver onto annuity holders. Sitting on six months cash is not what people invest in any company for.

Quite rightly people on this feed are saying how could anyone predict this was going to happen? Where I think there could be some more debate going forwards is in a global obligation for companies to have insurance on a proportion of revenues in such cases. I.e. transfer the risk onto companies whose job it is to price and spread risk in the market. If such an event should then occur at least airlines (and other companies) will then have a small safety net to rely on in a very rainy day. This said I see the immediate shortfalls, it relies on global cooperation or national airlines will just lobby in the good times for deregulation citing unfair competition if other countries don't match coverage etc etc. Also, as much as it is their job to measure and price as such, what if a 2008 style crisis happens and the insurance industry cannot cope with the sudden unexpected weight dumped on it in extreme unforeseen circumstances? The buck will again fall on the governments to rescue the system that was supposed to be the backstop. Ultimately, you want a capitalist system, companies folding in bad times while servicing capital owners in the good times is how it works.

hiflyeras wrote:
SIlly me...from the title of this thread I assumed that someone would have actually answered the question with a list of cash on hand for the world's major airlines.


Think it is a bit of a moot point. Of course we know companies like OZ and DY are going to struggle to get through, as others already have/will do by the end of May if IATA is to be believed, but cash on hand is only one measure of how long an airline will be able to last. This crisis is going to force airlines to be creative about raising cash in these times, e.g. whether it is getting good deals on aircraft leasing before/if the market ceases to cash in on assets they were owning previously. Some airlines can raise cash selling LHR slots to those with better balance sheets, or other methods. Business Insider did an interesting piece on selling miles on FFPs (link below). Of course what they give today they don’t have tomorrow, but sitting around and watching the bank balances draw down until extinction is not an option for any company.

https://www.businessinsider.com/delta-u ... rus-2020-4
 
F9Animal
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Re: Airlines cash reserves

Thu Apr 23, 2020 5:37 am

Okay, I will bite. What's wrong with having cash reserves saved for a downturn? It's the freaking industry, and we seem to see these crazy cycles and downturns pretty often in the airline industry. I can appreciate the stock buybacks and investments.... But.... I find it pretty difficult to see these airlines making record profits, and not having much cash saved for a situation like this.

Why is it now on the taxpayer to bail a company out that can't survive a few months to even a year in a major downturn? Like someone else mentioned, we are told to have a rainy day fund, with a goal of at least 6 months to weather something.

Survival of the fittest comes to mind. Wish I could have my hand out when I hit financial troubles.
I Am A Different Animal!!
 
Lootess
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Re: Airlines cash reserves

Thu Apr 23, 2020 5:41 am

dstblj52 wrote:
Sokes wrote:
Lootess wrote:
No publicly traded business should ever leave all their net earnings in the bank, that just makes them a possible takeover target along with potential future losses as money should be reinvested into the business and employees. New terminals, aircraft investment, money to sustain new hub/market potential, etc. Which DL has done, did people just forget DL employees got the biggest bonus in their history months before this dumpster fire?

I don't understand what you mean.

Usually we discuss here on a.net if it's o.k. that Boeing has more obligations than assets (= negative equity).
I believe to expect companies to keep nearly 50% of GDP as cash reserves is overdoing it.

The problem is that if a company has a lot of cash or assets it's really easy to do something like the leveraged buyouts that happened to NWA.


Bingo. Plus no one wants to be a hostile takeover target because the shares of the company have gotten further away by not trying to reign it in when the going is good, you could see another "Keep Delta my Delta".

Not to mention the customer service aspect, a company shouldn't be making profits and dumping it all in the bank. Employees needs to share in the wealth, customers too with re-investment in the product. New Delta One suites, improved Skyclubs, new terminals.

Another reason why Delta's losses are going to be much less than the others long-term is because they have paid down a considerable amount of debt over the years. Everyone can be a critic in hard times, but the truth is Delta was as responsible with profits as they should have been.

Lastly, everyone's love-bird Southwest needed the loan package as well.
 
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kordcj
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Re: Airlines cash reserves

Thu Apr 23, 2020 6:47 am

F9Animal wrote:
Okay, I will bite. What's wrong with having cash reserves saved for a downturn? It's the freaking industry, and we seem to see these crazy cycles and downturns pretty often in the airline industry. I can appreciate the stock buybacks and investments.... But.... I find it pretty difficult to see these airlines making record profits, and not having much cash saved for a situation like this.

Why is it now on the taxpayer to bail a company out that can't survive a few months to even a year in a major downturn? Like someone else mentioned, we are told to have a rainy day fund, with a goal of at least 6 months to weather something.

Survival of the fittest comes to mind. Wish I could have my hand out when I hit financial troubles.

The airlines prepared for what they thought was a 9/11 or even the 2008 financial crisis type of event where they take 10-30% revenue hits for a few months. Until last month, those were the 2 largest financial shocks airlines had ever experienced. I don’t believe any company in existence in any industry has a plan in place to survive revenue drops of 0-3% for an extended period of time. If they do, then they don’t have a sound business plan.

Even if the airlines hadn’t done the share buybacks, at most they’d have an extra 2-4months cash on hand. In the US, we are already 6 weeks into this. Just because states are opening the economy doesn’t mean planes will magically start to fill up. Anyone capable of rational thought can see this virus is going to keep travel at a standstill far beyond May 4th.
The most obvious proof for intelligent life in the universe is that they haven't tried to contact us.
 
pezzy669
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Re: Airlines cash reserves

Thu Apr 23, 2020 7:18 am

Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.
 
Max Q
Topic Author
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Re: Airlines cash reserves

Thu Apr 23, 2020 10:41 am

pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.



Op has been in the airline business since 1986, I’ve seen bankruptcies, inept management, oil price wars, 9-11 etc..

One thing I know from personal experience is that cash rules and whoever has the most survives


And one thing you can count on is there’ll always be another crisis
The best contribution to safety is a competent Pilot.


GGg
 
Lootess
Posts: 497
Joined: Sun May 13, 2018 6:15 am

Re: Airlines cash reserves

Thu Apr 23, 2020 3:04 pm

Max Q wrote:
pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.



Op has been in the airline business since 1986, I’ve seen bankruptcies, inept management, oil price wars, 9-11 etc..

One thing I know from personal experience is that cash rules and whoever has the most survives


And one thing you can count on is there’ll always be another crisis


There will always be an airline crisis in our lifetime, whether human-inflicted or nature. That's just an unfortunate fact.

The 737 MAX was already starting to drown Boeing, and this has made their position worse. A plane they manufactured isn't flying, there isn't a business model to account for that, or when your customers refuse delivery or cancel a significant amount of their orders. There is no business in bad business.

There is no airline business model that says you should prepare for an average 10% LF on a daily basis. You don't build your business with a $50+ million/day burn rate. It's not possible. No business is just bad business.

Look at other businesses that are reeling with having 0 customers.

Sure this is worse than 9/11, but the airlines have their cost model in way better shape that a bridge loan will get them through the rough skies, and they'll be able to pay it back easily when people start to fly again, with interest to boot.
 
eurotrader85
Posts: 166
Joined: Wed Oct 24, 2018 8:45 pm

Re: Airlines cash reserves

Fri Apr 24, 2020 4:34 am

Max Q wrote:
pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.



Op has been in the airline business since 1986, I’ve seen bankruptcies, inept management, oil price wars, 9-11 etc..

One thing I know from personal experience is that cash rules and whoever has the most survives


And one thing you can count on is there’ll always be another crisis


There will be, but this is the capitalist world and companies are not operated to withstand an unforeseen shock that may or may not occur with ginormous cash buffers. They are run in the interests of their investors, whom mostly have a very different opinion to OP from what they want from their investment. If you disagree you are welcome to buy all the shares of AA or IAG or whoever and demand they run it differently, but you might find yourself you had a better use of the cash used.

I understand the sentiment of airlines having to go cap in hand to govt's every time there is a crisis, but we are talking of an industry that over the long run is woeful in making profits, highly competitive, and in the midst of the strangest situation the modern world has seen itself in. I like the idea that companies should be pushed to insure against such events, in effect transfer the bailout burden onto the private sector than the public. But it is obviously very difficult for an insurer to price such a black swan event and is not full proof anyway, depending on coverage it may or may not be adequate. Further the cost would have to be passed onto the consumer, making ticket prices less competitive, creating tit for tact between airlines on coverage they insure against. Finally it is not a crime to run a company for the good times and let it go bust in the bad, despite if that feels morally re-pungent. In this case it is just some airlines have got to the point that they are deemed so important to economies that the social cost of losing them outweighs the financial cost of bailing them out. That's a political point.

Interesting article below discussing Thai's govt loan looks like set to receive.
https://asia.nikkei.com/Business/Transp ... tes-rescue
 
Aither
Posts: 1300
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Re: Airlines cash reserves

Fri Apr 24, 2020 7:56 am

In the past there were more conglomerates having different sorts of activities, ideally counter cycle activities.
So for an airline the best protection would be to invest on ...Netflix...
Never trust the obvious
 
Sokes
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Re: Airlines cash reserves

Fri Apr 24, 2020 6:18 pm

If cleaning personal strikes the employer can say: "O.k., just leave the bucket in the corner." There is very less invested capital, labor cost is dominant. Therefore cleaning personal has no blackmailing power.
If pilots go on strike the airline can't just say: "O.k.., leave the plane on the tarmac."
That's not my idea. One can find that reasoning in Milton Friedman's "Capitalism and freedom".
So I assume if airlines would keep more cash, pilots would demand more salary.

This virus is just to big. Nuclear power plants can't be insured. It's extreme unlikely, but if it happens the potential damage is just too big.
This is not 2008 where banks gambled because politicians failed to regulate them. I don't see any moral hazard or any injustice if governments pay salaries. It is the government's task to prevent widespread bankruptcies. We don't need another 1929. The government just needs to make sure there are no arbitrary decisions. If pilots are paid by the government, so have to be waiters in restaurants.

The government could put a tax/ fee on tickets which is refundable in case of black swans. Each airline has it's own account. It's competitor neutral.
Why can't the world be a little bit more autistic?
 
Sokes
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Joined: Sat Mar 09, 2019 4:48 pm

Re: Airlines cash reserves

Fri Apr 24, 2020 6:25 pm

dstblj52 wrote:
The problem is that if a company has a lot of cash or assets it's really easy to do something like the leveraged buyouts that happened to NWA.

" Northwest was forced to file for Chapter 11 bankruptcy protection ... on September 14, 2005.
...
on May 18, 2007, Northwest Airlines was cleared by a federal bankruptcy judge to emerge from Chapter 11 Bankruptcy protection on May 31, 2007, ending Northwest's 20 months of difficulty trying to slash costs.
...
On April 14, 2008, Northwest Airlines announced that it would be merging with Delta Air Lines to form the world's largest airline. The merger was approved on October 29, 2008."
https://en.wikipedia.org/wiki/Northwest ... tcy_filing

I heard about leveraged buyouts. They are another indicator that stock value can be far from the real value of a company. So no, the market doesn't know best.
However NWA doesn't seem to be a case of a company having far more assets than liabilities or making far more profit than stock prices suggested. Moreover it was a merger, not a buyout.

"A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company's cash flow is the collateral used to secure and repay the borrowed money."
https://en.wikipedia.org/wiki/Leveraged_buyout

However as we speak of airlines having too much cash which makes them attractive for a leveraged buyout the situation would be something like this:
Delta takes credit from a bank to pay shareholders of NWA. NWA cash in the bank is used to pay back part of the credit which Delta took to aquire NWA. Maybe or maybe not part of credit may be paid back by selling land parcels which were valuable, but didn't show so in the books as already depreciated. Remaining credit is paid back in time with profits from NWA operations.
None of this stuff happened.

Moreover in a leveraged buyout a majority of shareholders would have to approve or sell their shares. Is it the management's task to prevent a situation that more than 50% of shareholders find attractive?

I believe the movie "Wall Street" with Michael Douglas shows a case of leveraged buyout. But the way to pay back the debt was through the sale of land. That land value was not reflected in share price.
As Michael Douglas says: "Greed is good, greed works." If this land is not used properly it's good that ownership changes. After all land is a limited resource.
It's of course greed within proper government regulation. So greed is not a problem. Faulty government regulation is a problem.
Why can't the world be a little bit more autistic?
 
ScottB
Posts: 7066
Joined: Fri Jul 28, 2000 1:25 am

Re: Airlines cash reserves

Fri Apr 24, 2020 8:44 pm

Max Q wrote:
These billions could have been spent lowering debt and building cash reserves. Most financial planners recommend a six month rainy day fund

Why not the airlines too?


Because most individuals have a sole source of income by way of a job. If that job suddenly goes away they have no money coming in to cover rent, food, medicine, car payments, utilities, etc. It is exceedingly rare that a large company has a sole customer to provide income (although defense contractors come close). Typically companies will have time to adjust to a more gradual downturn than what we've seen from governments making the decision to very nearly halt their economies.

Sokes wrote:
woman:
I shouldn't dress nice or have beautiful hair as this might make me attractive for a union with a man.


If it's a union with a man who lies to her, physically abuses her, and leaves her five years later with no assets, three children, and $100,000 in credit card debt maybe she shouldn't.

Max Q wrote:
Op has been in the airline business since 1986, I’ve seen bankruptcies, inept management, oil price wars, 9-11 etc..


If you've been in the business that long, you might then remember how Carl Icahn stripped TWA of assets in order to enrich himself. It didn't even take 9/11 to bankrupt TWA.

Sokes wrote:
Moreover in a leveraged buyout a majority of shareholders would have to approve or sell their shares. Is it the management's task to prevent a situation that more than 50% of shareholders find attractive?


More than 50% of shareholders tend to find dividends and share buybacks attractive. Is it management's job to avoid that to potentially deal with a black swan event?

Sokes wrote:
It's of course greed within proper government regulation. So greed is not a problem. Faulty government regulation is a problem.


The current situation in the airline industry (and many others) has essentially been created by the government. While a lack of action on government's part would likely have resulted in hundreds of thousands or millions more deaths, the economic impact has been far more devastating than otherwise would be expected. So government regulation is also the source of the problem here.
 
Sokes
Posts: 1877
Joined: Sat Mar 09, 2019 4:48 pm

Re: Airlines cash reserves

Sat Apr 25, 2020 7:41 am

ScottB wrote:
Sokes wrote:
Moreover in a leveraged buyout a majority of shareholders would have to approve or sell their shares. Is it the management's task to prevent a situation that more than 50% of shareholders find attractive?

More than 50% of shareholders tend to find dividends and share buybacks attractive. ...

I have to 100% agree. As I always like to criticize Boeing management and board, my remark was really not thought through. Thinking about it I came up with the following:
A) There are different legal entities of companies:
sole proprietorship,
different partnerships,
Limited Liability company = PvtLtd,
corporation = joint stock company,
cooperative
...
B) Should joint stock companies also have different classes?
-low risk:
Between 10%- 20% equity ratio no dividend is allowed. Below 10% new stock has to be issued. Old owners are asked first if they want to buy new stock. At least 60% of profits have to be reinvested. No stock buybacks allowed.
No dealings with financial papers are allowed, e.g. derivatives, currency hedges... . Management is not paid bonuses. Instead they get higher salary.
The company can only be merged with or acquired from a joint stock company that is medium or low risk. The new entity in case of merger would have to be low risk.
Low risk corporations would need a two third majority to acquire companies with less than 20% equity.

-medium risk:
If equity ratio falls below 15%, no dividend is allowed. If equity falls below 5% new stock has to be issued. Old owners are asked first if they want to invest in new stock. At least 30% of profits have to be reinvested. No stock buybacks are allowed.
No dealings with financial papers are allowed, e.g. derivatives, currency hedges... . Management is not paid bonuses. Instead they get higher salary.
The company can only be merged with or acquired from a joint stock company that is medium or low risk. In case of merger the new entity would have to be medium risk if the other party is medium risk and low risk if the other party is low risk.
Medium risk corporations would need a two third majority to acquire companies with less than 15% equity.

-high risk:
No legal restrictions concerning equity, dividends, how much is reinvested or stock buybacks. Old owners don't have to be asked first if they want to buy new stock. Dealings with financial papers is allowed. Management can get bonuses. In short: like today's law.
However no acquisitions of medium/ low risk corporations would be allowed.

One can object that each company can put such stuff in the "articles of association" during foundation. But for normal investors that is too complicated. However this three class system the average investor would understand.

The chance of this proposal to become law is of course very slim. Why would a saver put his savings in the bank if he can lend money to a company that needs to reinvest 60% of profits and needs to issue new stock once equity falls below 10%?
Why would politicians who want to suck up to banks do such a law?


Alternatively a simple law for all corporations:
If equity falls below 20% only 50% of profits can be used for dividends/ share buybacks. If it falls below 10%, no more dividend/ share buybacks are allowed.
I don't object a company like Tesla to have negative equity.
(Tesla as of 31.12.19 has 6,6 billion $ equity and 26,2 billion liabilities and an o.k. 19% equity ratio.
p.22, https://ir.tesla.com/static-files/b3cf7 ... 28b914b529
However I won't mind them having negative equity for some time during a recession.)
Indeed for the American Dream negative equity might be a necessity. However such companies would probably not mind that they can't pay dividends.

I am hostile to stock buybacks. If somebody has 25 % share in a company and can "convince"/ bribe the management/ board to stock buybacks, he sooner or later gets control of the company. But this is on the cost of innovation and financial health of that company.
I believe stock buybacks would best be totally banned. However I don't mind what high risk investors do with their money.

Thanks again for challenging me. It was a fun exercise to order my thoughts.


The German political left intellectual/ politician (no joke!) Sarah Wagenknecht gives the Zeiss foundation ( founded 1889! ) as an example of how capitalism should work.
The management there doesn't earn much, labor enjoys good conditions, profits have to be reinvested...
For anybody willing to read 32 pages, here the statutes:
https://www.carl-zeiss-stiftung.de/d/co ... 092018.pdf
My "low risk" suggestion is something of a merger of Zeiss foundation and dividends for shareholders.

I used to have stocks. I lost interest. I think the government rules and regulations for corporations fit to the government rules and regulations concerning banking.
Both suck!
And as we already speak of different classes: Roosevelt introduced different classes for banking. He separated commercial banking form investment banking. We need his regulation back.
Why can't the world be a little bit more autistic?
 
dstblj52
Posts: 502
Joined: Tue Nov 19, 2019 8:38 pm

Re: Airlines cash reserves

Sat Apr 25, 2020 6:43 pm

Sokes wrote:
dstblj52 wrote:
The problem is that if a company has a lot of cash or assets it's really easy to do something like the leveraged buyouts that happened to NWA.

" Northwest was forced to file for Chapter 11 bankruptcy protection ... on September 14, 2005.
...
on May 18, 2007, Northwest Airlines was cleared by a federal bankruptcy judge to emerge from Chapter 11 Bankruptcy protection on May 31, 2007, ending Northwest's 20 months of difficulty trying to slash costs.
...
On April 14, 2008, Northwest Airlines announced that it would be merging with Delta Air Lines to form the world's largest airline. The merger was approved on October 29, 2008."
https://en.wikipedia.org/wiki/Northwest ... tcy_filing

I heard about leveraged buyouts. They are another indicator that stock value can be far from the real value of a company. So no, the market doesn't know best.
However NWA doesn't seem to be a case of a company having far more assets than liabilities or making far more profit than stock prices suggested. Moreover it was a merger, not a buyout.

"A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company's cash flow is the collateral used to secure and repay the borrowed money."
https://en.wikipedia.org/wiki/Leveraged_buyout

However as we speak of airlines having too much cash which makes them attractive for a leveraged buyout the situation would be something like this:
Delta takes credit from a bank to pay shareholders of NWA. NWA cash in the bank is used to pay back part of the credit which Delta took to aquire NWA. Maybe or maybe not part of credit may be paid back by selling land parcels which were valuable, but didn't show so in the books as already depreciated. Remaining credit is paid back in time with profits from NWA operations.
None of this stuff happened.

Moreover in a leveraged buyout a majority of shareholders would have to approve or sell their shares. Is it the management's task to prevent a situation that more than 50% of shareholders find attractive?

I believe the movie "Wall Street" with Michael Douglas shows a case of leveraged buyout. But the way to pay back the debt was through the sale of land. That land value was not reflected in share price.
As Michael Douglas says: "Greed is good, greed works." If this land is not used properly it's good that ownership changes. After all land is a limited resource.
It's of course greed within proper government regulation. So greed is not a problem. Faulty government regulation is a problem.

Your looking to late it was 1989 and it was only possible because NWA owned almost the entirety of their fleet and had substantial cash reserves
 
Sokes
Posts: 1877
Joined: Sat Mar 09, 2019 4:48 pm

Re: Airlines cash reserves

Sun Apr 26, 2020 5:37 am

dstblj52 wrote:
Your looking to late it was 1989 and it was only possible because NWA owned almost the entirety of their fleet and had substantial cash reserves

Right. I didn't knew. That makes for a nice discussion with people who are not interested in finance. I therefore started a new topic.
I leave it to the mods to merge or not to merge the new topic by giving a link to this topic. I myself am unsure if it's appropriate to start a new topic.
Why can't the world be a little bit more autistic?
 
Gremlinzzzz
Posts: 91
Joined: Fri Jan 24, 2020 4:28 am

Re: Airlines cash reserves

Wed Apr 29, 2020 3:51 am

pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.

How silly of Microsoft and Apple to stash away hundreds of billions of cash between them. How silly of GM to put away cash so that they never have to go for a government bailout should things really go south.

Having a rainy day fund is one of the best things any business can do outside not having leverage. Pay shareholders, but also plan ahead for the unseen. This is what management should be paid to do,
 
Sokes
Posts: 1877
Joined: Sat Mar 09, 2019 4:48 pm

Re: Airlines cash reserves

Wed Apr 29, 2020 3:39 pm

Gremlinzzzz wrote:
How silly of Microsoft and Apple to stash away hundreds of billions of cash between them.

Warren Buffet is another such fool.
He must be wondering why prices are not coming down.
Why can't the world be a little bit more autistic?
 
Danny
Posts: 3752
Joined: Thu Apr 25, 2002 3:44 am

Re: Airlines cash reserves

Sun May 03, 2020 5:41 am

Berkshire Hathaway sold all of their airline position as revelead by Warren Buffet during their annual shareholders meeting. Get ready for a stock masacre on Monday. On the other hand if you still believe in Delta, United, American and Southwest this might be your buying opportunity,
 
Arion640
Posts: 3078
Joined: Fri Mar 31, 2017 5:15 pm

Re: Airlines cash reserves

Sun May 03, 2020 12:55 pm

Sokes wrote:
Gremlinzzzz wrote:
How silly of Microsoft and Apple to stash away hundreds of billions of cash between them.

Warren Buffet is another such fool.
He must be wondering why prices are not coming down.


Well, i’m sure he’s created more jobs and earned more money than you ever have.
 
Sokes
Posts: 1877
Joined: Sat Mar 09, 2019 4:48 pm

Re: Airlines cash reserves

Mon May 04, 2020 3:19 am

Arion640 wrote:
Sokes wrote:
Gremlinzzzz wrote:
How silly of Microsoft and Apple to stash away hundreds of billions of cash between them.

Warren Buffet is another such fool.
He must be wondering why prices are not coming down.


Well, i’m sure he’s created more jobs and earned more money than you ever have.

Gremlinzzz made a joke. I joined.
Why can't the world be a little bit more autistic?
 
SnowBros
Posts: 5
Joined: Tue Aug 07, 2018 10:11 pm

Re: Airlines cash reserves

Mon May 04, 2020 3:25 am

Gremlinzzzz wrote:
pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.

How silly of Microsoft and Apple to stash away hundreds of billions of cash between them. How silly of GM to put away cash so that they never have to go for a government bailout should things really go south.

Having a rainy day fund is one of the best things any business can do outside not having leverage. Pay shareholders, but also plan ahead for the unseen. This is what management should be paid to do,

Nobody expected to have a crisis that will keep entire fleets grounded for such a long time.


Sent from my iPhone using Tapatalk
 
KFTG
Posts: 864
Joined: Sun Apr 28, 2019 12:08 am

Re: Airlines cash reserves

Mon May 04, 2020 3:42 am

SnowBros wrote:
Nobody expected to have a crisis that will keep entire fleets grounded for such a long time.

I can think of someone.
https://www.washingtonpost.com/technology/2020/05/02/bill-gates-coronavirus-science/
 
Gremlinzzzz
Posts: 91
Joined: Fri Jan 24, 2020 4:28 am

Re: Airlines cash reserves

Mon May 04, 2020 3:43 am

SnowBros wrote:
Gremlinzzzz wrote:
pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.

How silly of Microsoft and Apple to stash away hundreds of billions of cash between them. How silly of GM to put away cash so that they never have to go for a government bailout should things really go south.

Having a rainy day fund is one of the best things any business can do outside not having leverage. Pay shareholders, but also plan ahead for the unseen. This is what management should be paid to do,

Nobody expected to have a crisis that will keep entire fleets grounded for such a long time.


Sent from my iPhone using Tapatalk
The point I am trying to make is that you should not expect a crisis, you should anticipate it. We have gone through the oil crisis in the 1970's, we have gone through 9/11, we have gone through high oil prices from 04' to around 08'. We have had SARS, MERS, avian flu, and gone through the .com bubble and the 2008 housing derivative led economic crisis.

Airlines in all of this still refuse to have significant cash savings.
 
jetmatt777
Posts: 4325
Joined: Sun Jun 26, 2005 2:16 am

Re: Airlines cash reserves

Mon May 04, 2020 3:43 am

Gremlinzzzz wrote:
pezzy669 wrote:
Such a basic concept for people to believe investor funded companies should just stash away billions - this is not personal finance.

Even on the non-traded privately held company level I can say my company probably returns 85% of our excess cash flow back to investors, closer to 90% if you back out capital expenditures. Our investors would probably not invest in our company if we hoarded away enough cash to run each business unit for 6 months with no income.

OP needs to get a better understanding of the business world and how it rotates.

How silly of Microsoft and Apple to stash away hundreds of billions of cash between them. How silly of GM to put away cash so that they never have to go for a government bailout should things really go south.

Having a rainy day fund is one of the best things any business can do outside not having leverage. Pay shareholders, but also plan ahead for the unseen. This is what management should be paid to do,


We aren't talking about a rainy day - the airlines were plenty prepared for a rainy day. They, and no business, can be expected to have cash on hand to run the company with no revenue for months on end. This is a Category 5 hurricane, not a rainy day.
 
Gremlinzzzz
Posts: 91
Joined: Fri Jan 24, 2020 4:28 am

Re: Airlines cash reserves

Mon May 04, 2020 3:49 am

jetmatt777 wrote:
We aren't talking about a rainy day - the airlines were plenty prepared for a rainy day. They, and no business, can be expected to have cash on hand to run the company with no revenue for months on end. This is a Category 5 hurricane, not a rainy day.
What have they done last few decades? They have racked up debt, leasing is on the way up each year, airlines have returned profits to shareholders through dividends and/or stock buy backs. They have acquiesced to unions demands to a point where any new airline that has lower wage in routes that are competitive can drive them out of business.

Aviation has not looked inwards or tried to reform.
 
jetmatt777
Posts: 4325
Joined: Sun Jun 26, 2005 2:16 am

Re: Airlines cash reserves

Mon May 04, 2020 4:15 am

Gremlinzzzz wrote:
jetmatt777 wrote:
We aren't talking about a rainy day - the airlines were plenty prepared for a rainy day. They, and no business, can be expected to have cash on hand to run the company with no revenue for months on end. This is a Category 5 hurricane, not a rainy day.
What have they done last few decades? They have racked up debt, leasing is on the way up each year, airlines have returned profits to shareholders through dividends and/or stock buy backs. They have acquiesced to unions demands to a point where any new airline that has lower wage in routes that are competitive can drive them out of business.

Aviation has not looked inwards or tried to reform.


It takes 3 parties to make a business run: management, employees, and shareholders. Shareholders absolutely need to be compensated in such a capital intensive business that makes low profits compared to other industries. If you want those lounges, new airplanes, and fancy technology you have to bring outside investment to the table. I say this is a union employee, all 3 need to eat if a business is going to work out in the long term. If you stop investor returns they will take their money elsewhere and you will end up with AA of 2010. Hundreds of old airplanes that are always broken, massive delays, and piss-poor customer and employee relations.

Again, you can't expect businesses to stash away tens of billions of dollars in the bank. That is largely irresponsible because that money could be generating money elsewhere. I am sure you have a 401K investment, maybe you should completely cash it out and have it not earning any interest. That would not be fiscally responsible, just as it is not responsible for companies to have huge piles of cash lying around not earning a return. This is the storm of the century, no one saw this or predicted it.
 
SnowBros
Posts: 5
Joined: Tue Aug 07, 2018 10:11 pm

Re: Airlines cash reserves

Mon May 04, 2020 4:38 am

jetmatt777 wrote:
Gremlinzzzz wrote:
jetmatt777 wrote:
We aren't talking about a rainy day - the airlines were plenty prepared for a rainy day. They, and no business, can be expected to have cash on hand to run the company with no revenue for months on end. This is a Category 5 hurricane, not a rainy day.
What have they done last few decades? They have racked up debt, leasing is on the way up each year, airlines have returned profits to shareholders through dividends and/or stock buy backs. They have acquiesced to unions demands to a point where any new airline that has lower wage in routes that are competitive can drive them out of business.

Aviation has not looked inwards or tried to reform.


It takes 3 parties to make a business run: management, employees, and shareholders. Shareholders absolutely need to be compensated in such a capital intensive business that makes low profits compared to other industries. If you want those lounges, new airplanes, and fancy technology you have to bring outside investment to the table. I say this is a union employee, all 3 need to eat if a business is going to work out in the long term. If you stop investor returns they will take their money elsewhere and you will end up with AA of 2010. Hundreds of old airplanes that are always broken, massive delays, and piss-poor customer and employee relations.

Again, you can't expect businesses to stash away tens of billions of dollars in the bank. That is largely irresponsible because that money could be generating money elsewhere. I am sure you have a 401K investment, maybe you should completely cash it out and have it not earning any interest. That would not be fiscally responsible, just as it is not responsible for companies to have huge piles of cash lying around not earning a return. This is the storm of the century, no one saw this or predicted it.

Exactly. The crisis is like a world war even beyond that where all international borders are closed for an indeterminate time.

It is not just an economic crisis where you either keep or lose your job.

It is a moment that your life is at the stake. So nobody wants to fly. Capacity is down almost 90 % in international routes, domestic routes are around 1/3 of the normal times. That makes it the worst crisis of the airline industry.
 
CaptainObvious1
Posts: 50
Joined: Sat Apr 11, 2020 11:22 pm

Re: Airlines cash reserves

Mon May 04, 2020 4:39 am

jetmatt777 wrote:
Again, you can't expect businesses to stash away tens of billions of dollars in the bank. That is largely irresponsible because that money could be generating money elsewhere.


Hold my Beer.

- Microsoft, Alphabet (Google), Apple, Berkshire Hathaway, Facebook
 
jetmatt777
Posts: 4325
Joined: Sun Jun 26, 2005 2:16 am

Re: Airlines cash reserves

Mon May 04, 2020 5:07 am

CaptainObvious1 wrote:
jetmatt777 wrote:
Again, you can't expect businesses to stash away tens of billions of dollars in the bank. That is largely irresponsible because that money could be generating money elsewhere.


Hold my Beer.

- Microsoft, Alphabet (Google), Apple, Berkshire Hathaway, Facebook


And what were their revenues? What is their operating margin?

What do these business have in common with a transportation sector that is largely commoditized? Nothing.
 
Gremlinzzzz
Posts: 91
Joined: Fri Jan 24, 2020 4:28 am

Re: Airlines cash reserves

Mon May 04, 2020 8:11 am

jetmatt777 wrote:
It takes 3 parties to make a business run: management, employees, and shareholders. Shareholders absolutely need to be compensated in such a capital intensive business that makes low profits compared to other industries. If you want those lounges, new airplanes, and fancy technology you have to bring outside investment to the table. I say this is a union employee, all 3 need to eat if a business is going to work out in the long term. If you stop investor returns they will take their money elsewhere and you will end up with AA of 2010. Hundreds of old airplanes that are always broken, massive delays, and piss-poor customer and employee relations.

Again, you can't expect businesses to stash away tens of billions of dollars in the bank. That is largely irresponsible because that money could be generating money elsewhere. I am sure you have a 401K investment, maybe you should completely cash it out and have it not earning any interest. That would not be fiscally responsible, just as it is not responsible for companies to have huge piles of cash lying around not earning a return. This is the storm of the century, no one saw this or predicted it.
We keep going through these business cycles and people seem to learn less and less.

Stock buy backs used to be illegal especially after the great depression because they were seen as a tool to manipulate the stock market. This was the case until 1982. Businesses that have spent money on their own stock were doing this to project higher earnings per share, and doing so in an upward market was supposed to make the share price trend upwards in conjunction with the market wave. These buy backs in themselves are now foolish especially for companies that have not stashed any cash away because it is management and a board stating that they have no use for this cash.

This is money that could be used in new equipment (and potentially getting lower lease ratios), money that can be used to pay down debt (more earnings down the road because debt obligations also come down), money that can be used in acquiring more parts. There are a million things any of these airlines could have done with this cash other than buy back their own stock, stock that they were buying in an inflated market that was primed for a downward trend any way because there is too much leverage on the system.

This is the weird world we live in. I remember when Mary Barra was turning GM into a solid company, paying down taxpayer money, giving out dividends and bolstering their reserves.......you had a few shareholders who demanded stock buybacks (and got them them), those who demanded that the company have a limit on reserves at $18B (and got it), while there were those that wanted a split in common shares (and did not get them). A profitable company she is running, a solid company, but even in this case, there are shareholders who would want to see nothing more other than an uptick in share price......the word commonly used is that they are frustrated, some calling for a change in management. This is the irresponsible world of business that we live in. This is how Jack Welch stripped GE of its assets as Wall St. clapped, this is how Carl Icahn gutted Northwest, and this is how McDonnell Douglas lost market share, got bough out and shaped the business practices of Boeing to a point where they cannot manufacture a quality aircraft either commercial, military or space.
This is why when you look and compare the type of service one gets from US airlines, it is far lower than the standard you get at many Asian, Gulf or Oceania carriers and even in Europe, you cannot compare the service you would get compared to some African carriers especially on shorter routes.

I would rather a CEO do what Mary Barra is doing, having a solid company even as hedge funds demand more and do not always get their way than what we see with airlines/Boeing that have fully acquiesced to the demands of Wall St.
Some of us grew up being told that the best way of looking at a company is how much it has in assets, how much money it has in the bank, and whether or not after tax, it is making money and hopefully very little in the way of liabilities. This for me is still the gold standard or how a company is to be valued, and not the speculation in the financial markets that inevitably leads to these boom bust cycles.

Today, some say that having money in the bank was fiscally irresponsible. Well, the good days are done for shareholders who are looking at way lower stock prices that will take time to get back to record highs, higher leverage and debt commitments, a hold to stock buy backs and reduced dividends. For employees, they will see a shrinking of the airline, and airlines looking for more concessions from unions, and they will most likely get them, and for management, shackles from Uncle Sam or governments worldwide as is often the case with bailouts. This is why Boeing went to the credit markets.......and while they will keep independence, what they can do is going to be hampered in the medium term to long term by all this debt they have to pay down.

If the expected recession does follow covid 19, these airlines not named Southwest (because their leverage was low to begin with) will be in for one heck of a ride.

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