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.
Lufthansa rescue gives taxpayers first-class seats 21 May 2020 The German flag carrier will get a 9 bln euro bailout, including new shares and non-voting stock. The government gets a 25% stake on the cheap, and a more generous payout than other investors. Shareholders can at least be grateful that politicians are staying out of the cockpit.
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.
Corona Capital: Travel companies, Oil 18 May 2020 Concise views on the pandemic’s corporate and financial fallout: Travel companies have sunnier days; oil traders have triumph of hope over experience.
Italy just can’t quit its terrible Alitalia habit 15 May 2020 Using the virus as cover, Rome earmarked 3 bln euros for the stricken airline, twice the boost it’s offering to its education system. That adds to 10 bln euros taxpayers wasted on Alitalia since 2008. The EU may declare it unfair state aid. But the cash will have already flown.
Corona Capital: Exxon, Clorox 1 May 2020 Concise views on the pandemic’s corporate and financial fallout: Exxon is getting clean by manufacturing much-needed medical-grade hand sanitizer while bleach maker Clorox will likely continue its winning streak.
British Airways jobs cull sends EU bailout Mayday 29 Apr 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.
Corona Capital: Primed debt, Lysol 24 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Senior creditors get “primed”; Reckitt Benckiser warns customers not to inject Lysol.
Branson’s asset-light touch leaves Virgin exposed 21 Apr 2020 Despite his reputed billions, the bearded businessman is struggling for cash to save Virgin Atlantic. Like the ailing airline, Branson owns little: His assets include a Caribbean island and stakes in ventures like space tourism. The brand-centric business has found its limits.
EasyJet files turbulent post-virus flight plan 16 Apr 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 Apr 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 Apr 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.
Corona Capital: Lufthansa, JPMorgan, Foursquare 7 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Lufthansa parks hopes of a quick airline-industry recovery in the hanger; JPMorgan skirts close to committing an early earnings faux pas; and Foursquare checks into the M&A market.
Virgin has bailout headwinds besides Branson 3 Apr 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.
Viewsroom: Lingering lockdowns 2 Apr 2020 Breakingviews journalists around the globe check in with Editor Rob Cox to discuss Silicon Valley’s response to the coronavirus, how European regulators are forcing banks to hoard dividends, and one of the biggest corporate rescues yet of the crisis: Singapore Airlines.
Airlines face overdue dilemma taking Treasury cash 1 Apr 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.
America should bail out airlines the American way 26 Mar 2020 A $50 billion government lifeline hardly sounds like capitalism. But the U.S. has been an outlier in not propping up its airlines. Bank bailouts already showed the public can emerge better off. The key is to strike a good deal, even if that means taxpayers end up holding equity.
U.S. bailout needs fewer diversions, more speed 24 Mar 2020 Lawmakers are wedging non-Covid-19 concerns into the stimulus bill. Some are worthy causes, like getting airlines to cut emissions. But the $2 trln-odd rescue package’s goal should be to get aid where it’s needed fast. As the 2010 Dodd-Frank Act showed, broader issues can wait.
Trump bumps smart infrastructure punters to coach 12 Mar 2020 The U.S. president’s Europe travel curbs crushed securities in the region’s top airports. Robust revenues attracted sharp, long-term investors to hubs like Paris-de Gaulle and London Heathrow. Plummeting footfall and high debt levels will challenge their status as safe havens.