Air Transportation

Corona Capital: GE cash burn, Macy’s lifeline

28 May 2020

Concise views on the pandemic’s corporate and financial fallout: General Electric’s cash flow will be more negative than expected as Covid-19 damages its aviation and power businesses; and U.S. department-store chain Macy’s borrows more, buying time but not much else.

Latin America puts new spin on airline distress

26 May 2020

The region’s largest carrier, Latam Airlines, has filed for bankruptcy protection weeks after rival Avianca did. It can’t bank on government bailouts and has hefty dollar liabilities, amplifying the shock of having to ground planes. The future looks a lot smaller.

Still time to make U.S. airlines pay their way

22 May 2020

Germany’s tough bailout of Lufthansa makes the U.S. government look a soft touch. True, it doesn’t make sense to punish an industry for problems not of its own making. But assuming more bailouts may be needed, there could be a chance for Uncle Sam to get more for the taxpayer.

American Airlines stock could be worthless

20 May 2020

The biggest U.S. airline by passengers might be the smallest by equity value. Despite a bankruptcy revamp in 2013, American now has outsized debts relative to its big rivals. Assume a 15% cut to its long-term profitability, and its $4 bln market cap could be $4 bln too much.

Corona Capital: Natural gas, Disney, Brazil

19 May 2020

Concise views on the pandemic’s corporate and financial fallout: Investors are too optimistic about natural gas; theme-park veterans take key roles at Disney; and Sao Paulo’s idea of bringing forward holidays to improve social distancing proves confusing.

It’s a long jump back onto the travel bandwagon

19 May 2020

Despite the whopping 30% fall in globetrotting expected this year, tourists will pack their bags again just as they have after past crises. Health precautions will add costs, however, while empty middle seats hurt revenue. The relevance of corporate flyers also is bound to wane.

Corona Capital: Air travel, Starbucks

14 May 2020

Concise views on the pandemic’s corporate and financial fallout: Airlines’ experienced hands offer warning; Starbucks begins dance with landlords.

Corona Capital: Cruise ships, China/U.S. friction

13 May 2020

Concise views on the pandemic’s corporate and financial fallout: Royal Caribbean raises and dreams of a time when cruise ships come back into favor, while a U.S. pension fund decides to give Chinese stocks a miss.

British Airways jobs cull sends EU bailout Mayday

29 April 2020

The airline owned by IAG is axing a quarter of its staff amid the virus fallout, rather than seek state aid. The move highlights the limits of using government funds in the face of wrenching change. It’s ominous for Paris and Berlin, who may dole out $17 bln of taxpayer cash.

Boeing faces MAXed-out negative feedback loop

28 April 2020

Boss David Calhoun has boosted cash by cutting costs and borrowing billions. Government aid would help, too. But getting more 737 MAXs out the door – whether ones already on order or new sales – is key. Beaten-down airlines, though, are unlikely to want many of them.

Corona Capital: Small biz bankruptcies, NFL

27 April 2020

Concise views on the pandemic’s corporate and financial fallout. Small businesses get time but not money; the NFL’s draft viewership does a victory dance.

Messy Air France-KLM rescue has lessons for others

27 April 2020

The French and Dutch governments are lending their respective parts of the ailing carrier up to 11 bln euros. The tricky bailout exposes the frailty of the 2004 merger. Germany’s Lufthansa, which owns Swiss and Austrian, and Anglo-Spanish operator IAG may face similar challenges.

Virgin Australia could struggle to regain altitude

21 April 2020

The carrier has gone into administration with over $3 bln of debt after a bailout failed to materialise. Australia is loath to leave Qantas a monopoly, which should help spur a solution, maybe with local pension funds. Remaking Virgin into a success is a different story, though.

EasyJet files turbulent post-virus flight plan

16 April 2020

The budget carrier hopes face masks and empty middle seats will speed up a return to the skies. Such measures will reduce profit as well as infection risks but lower taxes and fuel prices could help. The bigger question is how soon punters will feel safe enough to travel again.

Mnuchin gives airlines right mix of bailout fuel

15 April 2020

The U.S. Treasury secretary negotiated potential equity stakes in the likes of American and United, as well as insisting they repay some of the $25 bln in virus grants. Airline officials aren’t happy. But the terms seem less punitive than banks got in 2008. On balance, it’s fair.

Norwegian Air is lesson in bare-bones bailout

14 April 2020

The airline’s future hinges on creditors swapping $4.3 bln of debt for its nearly worthless equity. That would unlock enough state funds to allow the company to operate as a regional carrier. Its loss-making dream of a low-cost transatlantic revolution is dead whatever happens.

Rolls-Royce secures extra viral flying time

6 April 2020

The aero engine maker axed its 2019 dividend and borrowed an extra 4 bln pounds. That buys it time to cope with grounded planes which are costing it 50 mln pounds a week. Its key market, long-haul flights, may be the last to recover. But Rolls should have enough cash in the tank.

Virgin has bailout headwinds besides Branson

3 April 2020

The bearded businessman’s airline wants 500 mln pounds in UK state aid. Supplier Rolls-Royce wants it to stay aloft; arch-rival British Airways does not. Branson’s non-resident status, a big U.S. co-owner and Virgin’s shaky financial record mean the government may agree.

Airlines face overdue dilemma taking Treasury cash

1 April 2020

U.S. bailout funds come with strings attached, like handing the feds stock. Taking the money means keeping more employees, but diluting shareholders. For arch-capitalists, that's objectionable. For society at large – and to ensure readiness for a recovery – it's only fair.

Corona Capital: GE, Oaktree, M&A back doors

1 April 2020

Concise views on the pandemic’s corporate and financial fallout. GE delivers its own form of cash injection, hedge fund boss Howard Marks praises heavy-handed Covid-19 responses, and a car-parts maker flirts with bailing on a deal.