Originally Posted by
Vindiesel
I wouldn't call it VA fear but have a look at the VAH half year report from last month and tell me why you shouldn't be concerned.
- Cash and cash equivalents dropped from $1.7b to $1.1b in 6 months to 31 December. What level do you reckon cash is at now? Maybe $1b at best? Maybe $900m?
- VAH operating expenditure is about on par with operating revenue for the 6 months to 31 December - both at around $3.1b for the period.(source: page 7 of half year report).
- If you assume a 30% reduction in revenue to about $2.1b for the next 6 months, which is by no means out of the questions with these travel restrictions, corporate travel bans and a reduction in discretionary leisure travel, then VAH essentially runs out of cash in 5-6 months.
Not saying I'm definitely right, but this doesn't seem far fetched in my opinion.
The 500m drop of the balance sheet was paying off a bond. They were very upfront to the market about that for the last year. The next bond is still 1.5 years off. That can either be refinanced, or, with the Boeing order extremely likely to be pushed back, capex freed.
So they have a billion bucks to play with for the foreseeable future. They are not going to blow a billion in the next half!
Just be mindful there is quite a bit of redundancy and transformation expenses in the last half. Also new contracts with airports and fuel suppliers.
They have already stated a 75m impact for the second half. I think that number could be doubled as a minimum. I think a conservative figure for H2 would be -250m considering we are nearly in the last quarter.
They will also gain a 70-100m Velocity Earnings for this half, and 100m in Employee Costs and Contracts gain from July.
Advice from modelling shows mid to late September rebound.