|Bid||214.50 x 0|
|Ask||214.90 x 0|
|Day's range||211.30 - 218.66|
|52-week range||2.20 - 684.00|
|Beta (5Y monthly)||1.51|
|PE ratio (TTM)||1.34|
|Earnings date||31 Jul 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||02 Jul 2020|
|1y target est||7.17|
(Bloomberg) -- Richard Branson has spent decades cultivating an image as a daredevil entrepreneur, glorifying risk with stunts such as sky-diving or hot-air ballooning across the ocean to promote everything from soda to space travel. Now, less than a week shy of his 70th birthday, Branson is taking one of the biggest gambles ever to save his flagship airline from the ravages of the coronavirus outbreak.With trans-Atlantic travel largely grounded for the foreseeable future, the company most responsible for building his global brand -- Virgin Atlantic Airways Ltd. -- was being pushed to the brink of collapse. After begging a reluctant British government for a bailout, Branson concluded his best option for raising money was to sell shares in Virgin Galactic Holdings Inc., the orbital tourism venture that has become his obsession in recent years.On Tuesday, Virgin announced a 1.2 billion-pound ($1.5 billion) rescue package that includes about 170 million pounds from U.S. hedge fund Davidson Kempner Capital Management and 200 million pounds that Branson got from diluting his stake in Virgin Galactic.“It’s the ticket to our continuing journey, and hopefully it also means a better birthday for Richard,” said Shai Weiss, Virgin Atlantic’s chief executive officer. “He’s put in 200 million, but we’ve helped wrap it up for him.”Bitter BlowOn March 24, when the news came through that U.K. Chancellor of the Exchequer Rishi Sunak had rejected an industry bailout, Branson was on Necker Island, the Caribbean redoubt from which he pilots his global empire. The decision came as a bitter blow, as Transport Secretary Grant Shapps had hinted he’d consider a rescue just days before.After leaving open the possibility of a broader package, the government decided that only companies with investment-grade debt would be allowed to access the Bank of England’s 330 billion-pound Covid Corporate Financing Facility. While Virgin Atlantic’s credit score isn’t public, it’s believed to be deemed junk by the three major ratings companies.Read more:Branson Wins Out With $1.5 Billion Virgin Atlantic RescueEU Resists Further Travel Opening With New Virus Wave a RiskU.S.-EU Discord Imperils Rebound in Prime Trans-Atlantic FlightsThe funds were later tapped by British Airways, EasyJet Plc and Jet2, and even Ireland’s Ryanair Holdings Plc and Wizz Air Holdings Plc of Hungary. Government officials told Virgin it might still qualify for assistance, but opposition was mounting in the U.K., with some politicians and newspapers arguing that Branson’s residency in the British Virgin Islands-- where there are no income or capital-gains taxes -- should preclude government aid.Branson’s insistence that he had always plowed his profits back into new businesses, and that his companies pay taxes in countries worldwide, did little to sway opinions. The government never definitively said no, but indicated money for Virgin would only be available if it had exhausted all other possible avenues, including lending from private institutions and funds from existing shareholders. Delta Air Lines Inc., which holds 49% of the carrier, was busy grappling with the pandemic in the U.S., and the outbreak had sapped the interest of most mainstream lenders.That left Branson, who holds 51% of the carrier, to come up with the cash or risk the failure of the airline he’d founded in 1984 as a foil to mighty British Airways. Since the billionaire’s fortune rested largely on the value of his companies, Branson had little choice other than selling less vulnerable assets to save the airline.Virgin Atlantic had suffered after Europe’s airline industry sorted itself into three megagroups, leaving Branson out in the cold. The Delta invstment, followed by Weiss’s appointment as CEO in January 2019, revitalized the carrier. Virgin soon ordered new aircraft and added destinations such as Tel Aviv and Mumbai, celebrated by glitzy launches featuring Branson schmoozing with passengers and laying on the charm for local grandees. Branson was so bullish on Virgin’s prospects that in December he pulled the plug on a deal to sell 31% of the carrier to Delta ally Air France-KLM.Courting InvestorsAfter Sunak’s March announcement, Weiss reached out to about 100 financial institutions seeking support. In May, at the height of the pandemic, he held a conference call from his west London home with about a dozen potential investors. The pitch focused on the recovery plan for Virgin Atlantic and a strategy for profitable growth in the medium term.A handful of firms came back with funding proposals, leading to a contest between Davidson Kempner and Elliott Management Corp. to provide a loan. While the breakthrough promised to raise substantial cash, it remained well short of the 500 million pounds Virgin Atlantic had originally asked the state to underwrite.So Branson ordered the sale of a chunk of Virgin Galactic, his most valuable listed asset, while indicating he was even prepared to mortgage his Necker Island bolt-hole. The share sale raised more than $450 million, of which Branson is committing a bit less than half to Virgin Atlantic. (He says he’ll use the rest to shore up other businesses.) The airline has asked creditors to defer some 450 million pounds in payments, and Delta has contributed with a delay of several years on bills for services such as IT and marketing.“We were excited to see the recapitalization come about,” Delta CEO Ed Bastian said on a conference call Tuesday. “It’s been an extremely difficult few months pulling that together. All stakeholders have made contributions to allow Virgin to fly again.”Employees will pay a heavy price, with more than 3,000 set to lose their jobs as Virgin shrinks to adapt to what could be years of reduced demand for long-haul flights. The carrier’s most profitable links -- from London to big American cities -- are all but shut down with the accelerating pandemic in the U.S. That leaves it dependent on less lucrative routes such as Israel and the Caribbean.Despite the cloudy outlook, John Strickland of airline advisory firm JLS Consulting says Branson had to save the carrier to protect his other interests, even if it meant loosening his grip on the space venture.“It wouldn’t have looked good to let it go,” Strickland said. Virgin Atlantic “shows his colors literally around the world, and airlines are much more of a topic for public discussion than something like Virgin Galactic, however cutting edge it may be.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Office for Budget Responsibility said 15% of those on the government's job retention scheme may not get their jobs back when the programme ends.
Quality and value are two of the most important drivers of stock market returns - yet many investors fail to take them seriously. At a time of deep economic un...
Union Unite has turned to MPs for support to prevent airlines including British Airways from automatically securing coveted landing slots.
International Consolidated Airlines might be a risky and controversial buy, but it’s a bargain stock that in my opinion could outperform the FTSE. The post As travel resumes, I’d buy this bargain stock to beat the market appeared first on The Motley Fool UK.
Spain's government will disburse 1.8 billion euros (1.5 billion pounds) in aid to support transport companies hit by the coronavirus pandemic, transport minister Jose Luis Abalos said on Tuesday. State-owned rail operator Renfe will receive 1 billion euros of the funds via an increase in its debt capacity, while 673 million will be for private transport companies, Abalos said after the weekly cabinet meeting. Air transportation companies have already received funds to help them pay for new safety measures imposed to curb the spread of the coronavirus.
Three of Europe's biggest airlines are to end a legal challenge against the British government after it scrapped its quarantine rule for travellers coming from some of the most popular tourist destinations. A lawyer for British Airways <ICAG.L>, easyJet <EZJ.L> and Ryanair <RYA.I> said that the airlines would end the judicial review of the policy, on the assumption that Britain publishes a list of exempted countries. "On the premise it materialises, we have agreed everything else which needs to be agreed," Tom Hickman, lawyer for the airlines, told the High Court in London, adding he had no reason to doubt it would be published later on Friday.
(Bloomberg Opinion) -- The ink has barely dried on Airbus SE’s announcement that it will cut 15,000 jobs, or about 11% of the workforce, and the French finance minister is already criticizing the cuts as “excessive.” Pushback from governments and trade unions is inevitable when big industrial companies announce layoffs. That’s especially true at Airbus, which has assembly lines on three continents and counts France, Germany and Spain as anchor shareholders.Redundancies are never pleasant and they’re a particular blow in aerospace because employees are usually highly skilled and well paid. Unite, a British trade union, said the loss of 1,700 Airbus jobs in the U.K. was an act of “industrial vandalism.” Airbus hasn’t cut this deep before, but the workforce is fortunate not to suffer even more. The impact of Covid-19 on Airbus’s aircraft-making business has been devastating. In 2020 and 2021, it will probably produce 40% fewer planes than planned. The company has no choice but to scale back. With the coronavirus now ripping through the southern U.S. again, any hope that American and transatlantic air travel would swiftly return to normal has been shot down. The aviation recovery will probably be slow and prone to setbacks. Airlines are cutting their staff numbers too — British Airways, for example, by 30% — and some may not survive the crisis.Instead of attacking the passenger jet manufacturer, Europe’s governments should be grateful that Airbus’s finances and order book were in decent shape before Covid-19 appeared. Its problems are mild by comparison with arch-rival Boeing Co., which is reeling from the grounding of the 737 Max. The American company announced 16,000 job cuts in April, and its balance sheet is in a far worse state.Of course, it stings that most of Airbus’s job cuts will be in France and Germany. Both countries have pledged billions of euros of support for the aviation sector.But at least European states haven’t had to directly recapitalize Airbus. At the end of March the manufacturer had 18 billion euros ($20.2 billion) of gross cash, plus a similar volume of available credit lines. It will burn though lots of money this year — in part because airlines either can’t or won’t take delivery of planes — but Airbus will end the year with only “modest” net indebtedness, according to Standard & Poor’s, which rates the company’s debt a pretty respectable A, albeit with a negative outlook.Contrast that with Boeing, which had $9 billion in negative shareholder equity at the end of March, and $39 billion of indebtedness. Boeing avoided a U.S. government bailout only by issuing a further $25 billion of bonds in April. It may consume an astonishing $16 billion of cash this year, according to a consensus of analyst forecasts compiled by Bloomberg, and its debt is rated only one notch above junk.While Airbus’s comparatively solid finances will help it withstand this unprecedented crisis, they shouldn’t be used as a justification for not facing reality. Using government subsidies to furlough employees only makes sense if you think demand will quickly bounce back. But pre-crisis levels of air traffic probably won’t be reached again until 2023, according to Airbus. Even that might be an optimistic assumption. Airbus revenue won’t fully recover until 2024, analysts estimate.The equity markets have certainly taken a dimmer view of Airbus of late, after it scrapped its 2019 dividend. The company was capitalized at almost 110 billion euros as recently as January, when its assembly lines could barely keep up with demand. Now, the market value has shrunk to less than 50 billion euros.Boeing’s shares, by contrast, have gained more than 90% since their March nadir because of hopes that the 737 Max will return to service. Massive stimulus from the Federal Reserve has helped too. Airbus shares have recovered only 28% during that period. Still, an over-inflated American stock market is one thing, the comfort of the European company’s cash pile is quite another.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Good shares at cheap prices are what the very best investors look for. At this time of economic turmoil and market volatility, could International Consolidated...
International Consolidated Airlines Group <ICAG.L> is reviewing its planned 1 billion euro (892 million pounds) acquisition of Air Europa because of the harsh economic climate caused by COVID-19, the CEO of IAG-owned Iberia was quoted on Sunday as saying. There has been speculation that IAG, which also owns British Airways, could look to walk away from the acquisition of Spanish carrier Air Europa, announced last November, or try to negotiate a lower price. Luis Gallego, CEO of Iberia and due to take over as IAG chairman in September, said in an interview with El Pais newspaper published on Sunday that the deal still made sense but the environment was much more difficult.
Once 'pooled' pilots return, operating flight crew members will get 7.5% of their deducted pay back, while the rest of the pay cut will be lost, the report added. British Airways, owned by International Consolidated Airlines Group <ICAG.L>, which also owns Aer Lingus, Iberia and Vueling, said in an emailed statement that "constructive talks are ongoing with (UK pilots union) BALPA to save as many jobs as possible." BALPA did not immediately respond to a request for comment.
Spanish airline Iberia will reduce the size of its fleet, the number of destinations it flies to and how frequently as the coronavirus pandemic continues to drag on demand, its chief executive officer said in a newspaper interview. Luis Gallego also told El Pais that Iberia, part of International Consolidated Airlines Group (IAG.L), wants to extend a temporary layoff scheme for workers, known as ERTE, until December. "In Iberia, we will be smaller, but we will exist, something that it is not clear other airlines will be able to say," Gallego said in the interview, published on Sunday.
The trade union battling British Airways (BA) has met investors in its parent company IAG, seeking to ramp up pressure on the airline over plans to cut staff, pay and conditions. Unite, the union which represents BA cabin crew, has responded by lobbying for law to be changed to allow BA to be stripped of some valuable take-off and landing slots at London's Heathrow Airport if it proceeds with it plans. Sharon Graham, Unite's executive officer, told Reuters it had won significant political backing for its campaign and met investors this week to highlight the risks to BA's profits if it lost key airport slots.
British Airways, owned by IAG, has made a proposal to its cabin crew that would mean those taking on a corresponding role under its restructuring proposals would be paid at least 80% of their current basic rate, an internal letter said. British Airways has come under fire from British lawmakers who have accused the airline of trying to "fire and rehire" its employees on worse pay and conditions, with trade union Unite saying that some cabin crew are facing pay cuts of 70%. It said employees who stayed on needed to accept "market-competitive pay rates" as it merges three previous cabin crew teams into one.
Baggage handler Swissport had warned the government's 14-day travel quarantine and reduced furlough grants would lead to job cuts.
(Bloomberg) -- Spain is weighing plans to significantly increase the size of its 100 billion-euro ($113 billion) loan-guarantee fund after the program attracted huge demand from businesses struggling to weather the coronavirus pandemic, according to people familiar with the matter.Officials are considering pledging as much as 50 billion euros in additional guarantees, one person said. Others said the ultimate size depends on how the negotiations unfold. They all spoke on condition of anonymity because the details aren’t public.A spokesman for the Economy Ministry, which oversees the program, declined to comment. Shares of Spanish banks rose Tuesday morning on the report.State-backed loan guarantees are a key feature in the global response to the economic fallout from the pandemic, with governments pledging trillions to help keep businesses afloat. Since Spain launched its program on March 17, banks have financed around 70 billion euros worth of loans –- about 54 billion of which are state-backed. That’s a much greater deployment of loan guarantees than in other European countries.Europe’s fourth-largest economy had one of the continent’s strictest lockdowns in response to the deadly outbreak of the virus. The economy is also greatly dependent on the floundering tourism industry, and its long-troubled labor market could see the jobless rate spike as high as 24% this year, according to central bank forecasts. In a worst-case-scenario, the Bank of Spain expects the economy to contract by as much as 15% in 2020.Across Europe, less than 15% of funds made available by governments through banks as loan guarantees for companies have been used, according to figures from seven of the region’s largest economies compiled by Bloomberg News. That means more than 2 trillion euros could still be deployed as of June 18.Europe Leaves $2 Trillion on the Table in Virus Recession FightIn Spain, the loans are funneled through the Instituto de Credito Oficial, known as ICO, a state finance agency. Most of the guarantees have been used to help support small and medium-sized companies. Some large businesses have also tapped the program. British Airways owner IAG SA borrowed around 1 billion euros through ICO to help its Spanish units Iberia and Vueling weather the collapse in travel demand.In the event of a default, the Spanish government has pledged to back 80% of a loan to an SME and 70% for a large company.When Socialist Prime Minister Pedro Sanchez first rolled out the program, some companies complained that banks were requiring them to purchase other products in order to secure financing, something known as cross-selling.Other business people said banks asked them to personally guarantee the loans, pledging their own homes, for instance. And some executives said the interest rates that banks were charging on the loans was unnecessarily high and not in line with the government’s guidelines.Those complaints from borrowers have, for the most part, quieted down. One reason, according to officials, is that the government has introduced the program in increments of around 20 billion euros each. That has allowed them to make tweaks along the way, detecting initial problems and then admonishing some banks to avoid cross-selling, for instance, in the following tranche.Spain rolled out the final increment of the 100 billion euro program last week, accelerating the conversations to bolster the size of one of the country’s most significant responses to the coronavirus crisis.European Central Bank policy maker Pablo Hernandez de Cos called on Spanish lawmakers on Tuesday to consider extending the loan-guarantee scheme to ensure financing for companies that are likely to remain viable once the acute part of the crisis is over.While larger businesses and those with a lower risk profile have been able to borrow at favorable interest rates without tapping the 100-billion-euro state-backed debt program, some smaller ones could have more trouble accessing funding without public support, he said.“It’s advisable to assess the possibility of having public guarantee mechanisms in addition to those that have already been approved,” Hernandez de Cos, who is also the governor of the Bank of Spain, said during a parliamentary hearing on the post-coronavirus recovery.(Updates with comments from Bank of Spain governor in final three paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As we start the second half of 2020, let's look at whether travel shares, including Carnival and International Consolidated Airlines, may belong in long-term portfolios.The post Are FTSE travel shares like Carnival or International Consolidated Airlines Group cheap enough to buy now? appeared first on The Motley Fool UK.
Spain's foreign affairs minister said the rule change was made “out of respect” for 400,000 Brits who have second homes in the country.
The IAG share price is facing severe short-term headwinds. Recovery won't happen until 2023. But could it be the contrarian buy of the decade?The post I think the IAG share price will take off again. Here's why appeared first on The Motley Fool UK.