Discussion in 'Stocks & Derivatives' started by scott_reeve, Mar 1, 2020.
QAN weekly chart:
It's only the start of the rot... these suckers are going to get hit hard from what I have seen
More than likely more selling pressure than buying pressure on travel related stocks for some time yet.
Saw a video last week on HK airport with dozens and dozens of Cathay planes parked up and not in use due to the riots and now CV-19. This was one of the major hub airports in Asia - now a lot fewer planes coming and going on FlightRadar24.
Now Airlines starting to slash fares in a big way.
Last week, there were return flights Melbourne to New York for $775. (there has been overcapacity of planes trans-Pacific well before CV-19 started).
Air Asia GC to KL or Vietnam return for around $130 to $170.
Hainan Airlines in China going under (well Govt hands).
How many airlines will not survive the 'turbulence' this year... ?
Definitely a buy but after the bail out and 12 months from now when demand starts to climb.
$5.07 close. Needs to move back above $5.23 asap, otherwise $4.17 is looking very likely as next downward target.
More news out about major airlines around the world grounding planes and telling 1,000s of staff to take paid or unpaid leave.
It's serious when Emirates starts saying it (major hub between most of the continents with biggest large aircraft fleet).
Now talk that Cathay alone has over 70 planes now grounded at HK.
120 of 152 Cathy Planes are grounded.
50% due to banning
50% due to zero demand on routes
Qantas cleaning cancels flight after passenger confirmed with coronavirus
Qantas cancelled its Wednesday afternoon service from Sydney to London via Singapore to fully clean the A380 aircraft used following confirmation it carried a passenger with coronavirus.
Another Qantas flight from Singapore to Sydney, using an A330 was also identified by NSW Health as transporting a man who tested positive for coronavirus.
It is understood cabin crew who had direct contact with the passengers on each flight have been placed into self-isolation.
Australia is likely put in bans for South Korea, Japan, Italy and Iran soon too
Airlines like this might be a good canary in the coal mine.
Also, where eventually humanity is over this episode, airlines fit enough to survive the hard times might present a great buy at the low.
Usually the Flag carrier will get a bailout. So Qantas shares might drop to $1 than it will bounce. Besides QAN has been cycle high to low to high share market darling
Will be interesting to see if my AirBnB property is hit. But bookings already got hit massively by the fires, so will be hard to tell which is the cause.
Doesn't ABNB show the nation of the booker?
There would be a lot of outrage if the Govt bailed out Qantas should SHTF for the global airline industry. It was only 2014, when QAN last asked the Govt for "financial help" for a $3bn unsecured loan. The request was rejected, and this turned out to be the right decision, as Qantas trimmed some fat from their accounts and started being more profitable.
Also, look at when Ansett went under in 2001. Ansett had a gaggle of fleet aircraft, cost heavy, over-staffed airline. It had 767 planes that had 3 man crews... because their pilots union demanded it (even though the 767 at the time was designed as a 2 pilot plane). Obviously, there is pain for the people that lost their jobs with Ansett, but this is the reality of a competitive corporate environment. Businesses have to adapt to the times to remain competitive. Following Ansett, we went from Duopoly to a more competitive environment with Virgin, Impulse and later Tiger.
Qantas too has a history of buying the wrong planes at the wrong time. It never bought the 777 when it came out, because it still had a young 747 fleet and committed to 12 A380s bundled with A330s. A380s were only suited for congested airports like London Heathrow & only one or two airlines have managed to get these aircraft costs down through large numbers (Emirates). It was also a late buyer of the 787 (although it intially bought some for Jetstar). Only now, under Qantas, is it finally bringing in more fuel efficient 787s into the fleet and retiring the 747s, and talk of buying A350s for Project Sunrise.
Another point to consider with Qantas group today is that it has stakes in subsidary airlines throughout Asia: Jetstar Japan, Jetstar Pacific (Vietnam), Jetstar Asia (Singapore), Jetstar New Zealand. How much will these subsidiaries drag on the parent group over the next year?
Unfortunately every time there is a down turn, or GFC-style event, a host of big business line up for bail outs for their prior bad decisions. The money usually gets sucked into a giant black accounting hole and the taxpayers get shafted.
As long as we have two but when there is only one.....
I personally think Virgin might not exist next year..... 20% owner HNA rolled over last week
Do you think Qantas will be allowed to fail too?
South Korea has 4 airlines of note
2 juniors are insolvent backed by grace of the banks atm
KAL is getting a standing 8 count
Asiana is on a stretcher
Money is on KAL to get a bail out.... few years back parents of KAL -> Hangin Group and South Korean government played chicken.
Hanjin Shipping Lines in 2016, was the time largest shipping company in korea, three times bigger than number 2 and the 7th largest shipping company in the world.
Hanjin Group said they needed a bailout, SK government said no
back and forth ensued (at the time hanjin group had many profitable assets)
Hanjin said Ok and initiated liquidation surprising the SK government.
I think some countries are more prone to bailing out 'national carriers' than others. Well, many are still part-owned by Governments, so they are more attached to those failures. I also think a lot of Australian's are over taxpayer dollars subsidising industry or bailing out bad business models. The Qantas 2014 decision shows that companies can actually turn around their business without taxpayer dollars as well.
Virgin has been loosing so much money for the last several years (if not longer), it's only been kept upright because of the stakes held by large overseas airlines.
If Virgin &/or Qantas go under at some point, their assets will be looked at by a large player for the right price. We are a well established aviation market with highly connected domestic markets. The triangle between Syd-Melb-BNE is best served by airlines in this country, as is all the major cities. There is no better travel option. Syd-Melb route is like the 3rd busiest route between 2 cities in the world & there will always be at least 2 players competiting for these markets. The tourism centres are the one's which are less viable in these sort of times, and already Jetstar & Tiger are scaling back routes.
The international arms for Virgin/Qantas are a different set of issues with a huge amount of competition coming from Asian, Middle Eastern and Nth America airlines.
There are plenty of corporate examples of firms failing, then getting bought out by a new player.
While not aviation examples, look at Network 10 - went into administration in 2017, with the TV market struggling against online stream services (Netflix etc) & a large billion $-budgeted ABC. Network 10 still operating under the same brand/model but now owned by CBS.
The steel industry had two main domestic producers - BlueScope & Arrium (OneSteel) - both got taxpayer money in GFC (up to $300 million), and Arrium ended up collapsing later on, with many of its assets purchased by Sanjeev Gupta. There will always be demand for long and flat steel products, but the industry has to adapt to fierce import competition.
Taxpayer bailouts just bail out bad management decisions. If there is a genuine market for product/service, those assets will be bought by more competent management or a completely new entrant will come in with fresh eyes and run a better business model. That's what Virgin did following the Ansett collapse (came in with 1 fleet type).
I disagree with your assessment, but I do see where you're coming from.
Mainly because I don't see Virgin surviving and Qantas getting into trouble at the same time.
But I do hope someone comes and bailout Virgin
Qantas wont go anwhere --Ill be buying some shares once the dust settles on the covid 19 as I think it will be good buying.
Yes, but majority of people staying were Australian, and majority of those from only a few hours away. i.e. weekend trippers.
So I'd expect all international visitors to vanish, and probably most interstaters too. That only leaves the local weekenders who drive, and even a good lot of them might stay home.
I'm basically have to write off the next 6 months.
You need to time it correctly, if you buy 10 shares before the bailout, than after bailout the "bailor" could get 9 newly created shares meaning your 10 shares will be worth 1
your asuming QANTAS will need a bailout
I dont think that will be the case nor do I thyink it would play out like your thinking if it did happen. GM was given billions in tax payer dollars that went off shore with no strings attached
I would fully expect teh government to do something similar here wit QANTAS if they got into trouble.
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