Airbone Bloodbath

[Mega]

https://www.zerohedge.com/markets/un...t-loans-expire

800-1,000 planes dumped!
Mike

[lakedaemonian]

Re: Airbone Bloodbath

With the sole exception of Virgin Care, every single business unit in Virgin Group is massively vulnerable to COVID-19.

Every.

Single.

Business.

Unit.

ALL of them are effectively shut down, or at minimum, dramatically hindered.

All of their costs remain, but with none of the revenue and cashflow.

On top of that, Virgin Voyagers is just about ready to launch with brand new cruise ships targeting Millenials using another $2 billion in debt load with zero cashflow.

Branson just might be the worst positioned high profile paper billionaire on the planet.

It’s unknown how interlinked all the companies in the group are in terms of banking covenants as well as Branson’s personal holdings.

But I think it’s very safe to say Richard Branson is a hipper, more successful version of Donald Trump with similar “business veneers”, more brand wrappers than substance....like Virgin Mobile that went down the gurgler.

I would guess Branson needs $500m+ cash a month just to keep the lights on, possibly as much as $1billion a month depending on creditors and bank loans.

Every month.

Branson has limited liquidity

And I don’t see his business units recovering quickly.

I suspect Virgin Group could be one of the first high profile casualties of this crisis.

My SWAG is 75-80% risk of catastrophic failure.

And that only begins to drop slowly if the world restarts in the next 30 days and we are back to a new normal in 90 days.

[GRG55]

Re: Airbone Bloodbath

The commercial air carriers, Virgin or otherwise, are merely high visibility examples of the current circumstance. Much of what you wrote above can apply to tens of thousands of other businesses in other economic sectors worldwide.

We've invented two new "races" on earth: Essential and Non-essential.

If your business falls into the latter category it's completely shuttered, the employees are jobless, the premises empty and the equipment idle. To have any opportunity to survive means getting fixed costs down as low as feasible to stretch out whatever cash reserves were available going into this mess. For many businesses that means seeking forebearance of rents and leases from landlords and lessors. And if the business carries any debt, such as an operating working capital line, there's always the debt servicing costs in that mix.

This applies as much to the now "non-essential" barber with a 2-chair rented shop on the High Street as it does to the airlines.

Few businesses, even the most prudent, have cash reserves that will allow them the luxury of surviving zero revenue much beyond 6-months, and many won't get that far. Even with meagre government support. If the lockdown is going to last that long most owners would be better off liquidating their inventory, abrogating their tenant contracts, closing up now and saving their cash to try to fund a re-start some time in the future. The problem is nobody knows if this virus disruption will last six more weeks or six more months.

The layoffs, business closures and income loss is falling disproportionately on the private sector. The amount of capital destruction we are going to witness will be epic. So will the loss of tax revenue to our governments. It's already started and we are still in the early phase of this pandemic.

Coming out of this I expect the "wealth gap" to be wider than ever (the 1%, who have liquid cash, are going to be busy scooping up quality assets at distressed prices with both hands), the incomes & standard of living for huge swaths of non-government workers to have fallen dramatically, much higher levels of direct government involvement/ownership in our economies (the Chinese model lives!) and structurally higher unemployment and poverty rates that last for years, perhaps decades.

And I'm an optimist.

[Mega]

Re: Airbone Bloodbath

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

[Mega]

Re: Airbone Bloodbath

[Mega]

Re: Airbone Bloodbath

[Mega]

Re: Airbone Bloodbath

[FrankL]

Re: Airbone Bloodbath

As expected, Air France-KLM has been bailed out with a 10 billion EUR loan by the French and Dutch governments.

Air travel within Europe might become quite profitable for well run carriers, once the dust settles. I'd expect quite some players to no longer be in business, resulting in monopolies or quasi-monopolies on many routes. Expect to start paying through the nose.

[Mega]

Re: Airbone Bloodbath

BA or rather their owners, they getting pissed tonight over the near cert death of Virgin

[shiny!]

Re: Airbone Bloodbath

Isn't living through history exciting?

[GRG55]

Re: Airbone Bloodbath

As expected, Air France-KLM has been bailed out with a 10 billion EUR loan by the French and Dutch governments.

Air travel within Europe might become quite profitable for well run carriers, once the dust settles. I'd expect quite some players to no longer be in business, resulting in monopolies or quasi-monopolies on many routes. Expect to start paying through the nose.

Precisely how would you define a "well run carrier" in the airline business?

[shiny!]

Re: Airbone Bloodbath

Precisely how would you define a "well run carrier" in the airline business?

One that doesn't smash your violin or kill your puppy or keep you prisoner sitting on the tarmac for hours? Oh wait. They all do that.

[GRG55]

Re: Airbone Bloodbath

One that doesn't smash your violin or kill your puppy or keep you prisoner sitting on the tarmac for hours? Oh wait. They all do that.

One problem in the airline biz is passengers want a concierge service at Greyhound bus prices. And complain when they don't get it. All the useless "passenger bill of rights" nonsense that applies only to the air transport business is indicative.

I have no crystal ball of what the world will look like in detail going forward, but I can see a scenario where the low cost carriers are done. And I can see another scenario where there's nothing but low cost carriers left.

I am also curious to see how this plays out for the "world mega-hub" strategy pursued by Dubai (Emirates), Abu Dhabi (Etihad) and Qatar Air. In the aftermath of the '08/'09 gfc Etihad bailed out Emirates.

[jpatter666]

Re: Airbone Bloodbath

Isn't living through history exciting?

"May you live in interesting times." -- rumored ancient Chinese curse

[shiny!]

Re: Airbone Bloodbath

One problem in the airline biz is passengers want a concierge service at Greyhound bus prices. And complain when they don't get it. All the useless "passenger bill of rights" nonsense that applies only to the air transport business is indicative.

I have no crystal ball of what the world will look like in detail going forward, but I can see a scenario where the low cost carriers are done. And I can see another scenario where there's nothing but low cost carriers left.

I am also curious to see how this plays out for the "world mega-hub" strategy pursued by Dubai (Emirates), Abu Dhabi (Etihad) and Qatar Air. In the aftermath of the '08/'09 gfc Etihad bailed out Emirates.

Sorry to derail the topic, but don't get me started on those Passenger Bill of Rights and Healthcare Bill of Rights and all the other B.S. Bills of Rights signed into law. They are abominations and they make me livid!

The founders understood that any rights bestowed by government can be just as easily rescinded by government.

But the rights in the original, one-and-only Bill of Rights were not given to us by government. These are rights that we are born with by virtue of being human, bestowed upon us at birth by our Creator.

The fundamental purpose of the Bill of Rights is to limit the power of government- to remind those who govern that they are our servants, not our masters- to tell government what it shall not do.

Putting the words "Bill of Rights" on top of whatever pandering lists they now write is a brilliant propaganda ploy. It trivializes the real Bill of Rights; makes it seem like it too was granted by government. These bogus Bills of Rights make poorly educated people think that all their rights devolve from government largesse.

When people no longer understand the source of their power and the limits of government, it becomes easy for politicians to turn Citizens into Consumers, and Consumers into Serfs. We all become Olivers with our hands out saying, "Please sir, can I have some more?"

Ah, crap, you got me started. I feel so old.

Now back to your regularly scheduled program...