Think a whole hr dedicated to BA on LBC right now

The CRS is a mechanism to keep 747 pilots employed but not flying at the expense of junior pilots (who would be flying but are now unemployed) and everyone remaining’s pay.

I’ll let you decide if that’s fair or not. I know what I think.

If true that IAG liquidity stood at €10.5 billion pre-Covid, and stated cash-burn of £20m per day, that equates to survival of approx 1 year.
Further, if needed, Qatar have said they would inject more equity into IAG, since they view it as a long-term investment.

The cargo revenue goes to an entity called IAG Cargo, so even though BA flies it, this profit is not attributed to BA.

WW interchanged IAG and BA numbers to suit his arguments, and he wasn’t called out on it.

Theres more to IAG than BA, so that cash burn figure needs to take account of the other businesses in order to get a true figure of a survival period.

That is a massively oversimplified and antagonistic view of what's going on.

BA flatly refused a deal to retain all the pilots, a deal which was offered by BALPA and the BACC. So to say the CR is due to the 747 pilots is not only flat wrong, it also puts the blame for CR on your colleagues and not the company position.

Nicely put..I had started to construct a response to that post but had so much trouble being polite that I decided it was best not to continue.

True.
However, the other businesses in IAG seem to be getting govt assistance and treating their staff far better than BA ever could (eg. temporary solutions, furlough).

Some of that cash is also likely to be money for tickets already paid for, and a fair bit of it is likely to need to be refunded.

This guy, Robert Boyle, former IAG director of strategy has got his head screwed on and is publishing some sensible factual stuff on his blog.
If you pop over here you will find it
https://rboyle.co.uk/2020/06/12/you-...till-its-gone/

If you only want a bite-sized chunk, here it is.

So let us do a crude calculation of the predicted liquidity position of IAG and Lufthansa at the end of Q2, by which time both companies are expected to have recommenced “a meaningful operation”. Lufthansa will have liquidity of €4.25 billion (the March position), plus the €9 billion stabilisation package, less three months of cash burn at €800m a month giving €10.9 billion. IAG gave a figure of €10 billion for their liquidity at the end of April, which I think went up from up €0.5 billion from the position at the end of March due to €1.3 billion raised from the UK and Spanish governments, offset by cash burn for April. That suggests a cash burn in April of €836m, slightly below the figure I calculated above. By the end of Q2, they will have burned another €1.9 billion, giving them €8.1 billion. Expressed in terms of their “normal” cash operating expenses when operating at full capacity (where Lufthansa is 1.7x the size of IAG), this gives Lufthansa 115 days of liquidity compared to IAG’s 147 days. Of course they both have many more days of liquidity than this, as this metric assumes zero revenue and full operating costs, but it is a good basis on which to compare the two companies.

Given the amount of assumptions that have gone into these calculations, my conclusion is that both companies will start the third quarter with similar levels of liquidity compared to the size of their pre COVID cost bases, with IAG in a somewhat better position (c 25% better). The big difference, of course, is how much backing it will have required from governments to get to that position. For Germany, it took €9 billion, compared to €1.3 billion for IAG, of which the UK government has only provided €0.3 billion.

Thanks for that. I had the pleasure of listening to Robert talk once and he is indeed a switched into chap; good orator too.
thats am excellent précis if where things are; and indeed points to positivities for Q3 and beyond compared to what is in the recent past. Still not in anyway out of the woods but I’d say the end of the beginning, rather than the beginning of the end.

I'm afraid that rather takes away from the logic of the argument, particularly for one with all the figures available. If I went to my bank manager and said "here's my cash flow projection, except I haven't put anything in for revenue, or for operating cost changes I've made", can you imagine what the reaction would be ...

Doors To Manuel

The problem with that article is that he is comparing German Government support for a German company with UK Government support for a Spanish company.

Doors To Manuel

Assuming that there is no significant revenue during the next 5 months, liquidity would be zero. Does IAG have further sources of liquidity? Is it's credit rating investment grade?

BA will survive and prosper but it needs to get a shift on in its reorganization.

The UK government needs to get more proactive in opening up cross border air corridors.

polax52

Allegedly, IAG has about a year of liquidity (survival) if it did nothing.
Cargo and repatriation flights continue, and gradually people are flying again.
New route to Montego Bay announced.

If IAG became desperate, there would be a rights issue.
Also, Qatar have said they would inject more equity into IAG if necessary.

777JRM: "If IAG became desperate, there would be a rights issue."
Yes indeed....
https://www.thetimes.co.uk/edition/b...ssue-zrddj95kh

On a more mundane issue for some but of great concern to many is what is happening to the pension deficit ? I agree that BA need to take action as it is extremely unprofessional to keep the workforce in this dreadful limbo!

Makes sense to do the rights issue from a place of relative strength (existing liquidity). This is the announcement I’d been waiting for. Assuming it is successful this gets us through the winter and into (with luck) vaccine territory.

HZ123

I know this much, from their latest missive. NAPS lost 10% of it's value, now I'm no pensions expert, but that doesn't sound good.

Don’t forget, pensioners are drawing on it, and since 2018 nobody is contributing to it (apart from BA to fund the deficit).
Also some people are taking it all out as a Cash Equivalent Transfer Value, to invest elsewhere.

The concern some may have is that if BA were to become insolvent, or create a situation, that would force NAPS into the Govt’s PPF.