US stock exchanges shut down again for 15 minutes after triggering (7%) limit.
I think when the crisis is over lots of people will be desperate to throw cash on holidays and socialising and things will bounce back quite quickly. The day the pubs reopen could easily be as big as St Patrick’s Day.
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Possibly.
Might just be people realise they ain’t all that, but I suspect I’m being ridiculous
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Beginning of end of travel I think. Climate change will become central once we solve this.
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It really won’t. It’ll become central.once oil begins to run out.
If they have any cash
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Sky have reduced call centre staff due to virus. You cannot cancel Sky Sports online but have to call them. This is despite there being no sports to show. This will end them you feel
Cunts
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Work related travel will fall off a cliff. This notion that you need to press the flesh to seal a deal is horseshit.
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100%. I’ve done business with several Nigerian princes in my time without ever actually meeting any of them.
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If you think this is undeserved you’re a begrudging, commie pig, he’s so worth it, especially now.
@anon60384913, in the Phoenix today.
https://www.thephoenix.ie/article/walshs-kicking-and-thumping-at-iag/
AFTER TRANSFORMING British Airways (BA) into the hugely successful International Airlines Group (IAG) over the last 15 years, Willie Walsh announced his premature departure from the company just as the recent €1bn Air Europa acquisition is set to deliver dominance on the south European routes. Happily for IAG, the CEO’s surprise exit has been delayed by the Covid-19 pandemic, so the group will have its best man in the cockpit in the coming months. Meanwhile, the share price collapse presents a real opportunity for Qatar Airways.
Following the Air Europa deal, the combination with Iberia is set to drive not just dominance but huge economies. Moreover, the coronavirus represents an existential threat to the airline sector and several airlines look set to crash land as FlyBe did three weeks ago. Norwegian Air, for example, could be in real trouble and find itself on the block again, this time at a bargain price, along with other airlines across Europe. For an operator like Walsh, this would have presented a huge opportunity.
Walsh took the underperforming British Airways out of its nosedive (it was effectively insolvent with a huge pension fund deficiency) to its position today where it is the most profitable airline in the world, with trading profits last year of €3.3bn (albeit down 6% on the previous record year). This was despite a BA pilots’ strike last September and a €6bn increase in its fuel bill.
Walsh realised the need for consolidation early and went on an acquisition programme, buying in British Midlands, the hopelessly loss-making Iberia, Aer Lingus, Vueling, Level and, most recently, Air Europa.
Last year, Iberia turned in an operating profit of €500m, representing a return on capital of 14%. It is now the fulcrum of IAG’s southern European growth, with two big base airports at Barcelona and Madrid. The €1bn Air Europa acquisition will turn Madrid into one of the world’s big hub airports, dominating the south Atlantic as well as increasing service to the Far East and Africa.
Closer to home, last year Walsh competed directly with Ryanair locally and also more than doubled Aer Lingus passenger traffic across the Atlantic. More than two million passengers were carried to the original core three cities of Boston, New York and Chicago as well as Los Angeles, San Francisco, Montreal, Washington, Miami and Minneapolis.
remarkable
With sales of just over €2bn, Aer Lingus (now run by Sean Doyle) turned in earnings before interest, taxes, depreciation and amortisation (ebitda) of just over €400m to return remarkable margins of just on 20% and a return on capital of no less than 22%.
One of the lesser-known brands in IAG is the Spanish budget airline Vueling. With its main base in Barcelona, Walsh has got this operation up to sales of just on €2.5bn and delivered an ebitda last year of just on €500m to return margins of just on 20%, equal to Aer Lingus. For a budget airline, this is truly impressive.
Walsh launched the low-cost Level airline in response to the aggressive tactics being adopted by Norwegian Air. He put on low-cost routes from Barcelona and Paris to service North and South America and also added significant short-haul capacity into Vienna, where Mick O’Leary is having a bumpy ride trying to turn the Lauda airline into a viable business. Level is now carrying almost one million passengers across the Atlantic on its long-haul service and over one million on its short-haul European services, principally hubbed out of Vienna.
Up to three years ago, Walsh operated a strategy based on a 50/50 split between Boeing and Airbus, with the former focused mainly on long-haul. Walsh identified that Airbus was winning the battle of designing better and more efficient aircraft and this trajectory has proved a wide one.
Not to lock himself out of Boeing, however, he ordered 35 of its new long-haul 787 Dreamliner aircraft. But more significantly, he ordered 100 of the big new long-haul Airbus A350s and 12 of the even larger Airbus A380s, which latter production is now being phased down. These long-haul Airbus aircraft are being brought in to completely phase out IAG’s big fleet of Boeing 747s.
On short-haul, Walsh has moved fully to Airbus and ordered 200 of the new A320 Neo aircraft, which the disastrous Boeing 737 Max was designed to tackle head-on.
Over the last five years, Walsh has gradually evolved IAG’s structure and has not been involved in the detailed operations concerning the five airlines inside the group. Instead, he has focused more on strategy and capital allocation between the five airlines. To this extent, last November he greenlighted Iberia CEO Luis Martín’s plan to buy Air Europa, because Walsh saw Martín as the most effective executive he had inside IAG.
AIRPORT HUBS
Luis Martin
On the southern Atlantic corridor, IAG now has another huge hub at Madrid airport, which has capacity to double passenger numbers, with subsidiary hubs in Barcelona and Vienna to back this up. This model mirrors the situation in London, where the giant Heathrow hub is backed up by subsidiary hubs at London Gatwick as well as Dublin.
The Italian Alitalia airline would have been Walsh’s next target – he would be one of the few execs who would fancy sorting out this mess – to give IAG another twin-hub structure in Rome and Milan.
JOINT VENTURE
Willie Walsh chose not to take on the Chinese, but rather entered into a “revenue sharing joint business venture” with China Southern Airlines to dominate the rapidly growing traffic between, in particular, China and London, which is the largest European destination for the Chinese. The joint venture gives IAG a 31% market share of this huge Chinese business.
These are the key strategic decisions that Walsh, as group CEO, was focused on. Walsh characterises his management process as exerting “vertical and horizontal influence. Now, that can be pushing and pulling, kicking and thumping, but generally it is done in a collaborative way to ensure that all of the operating companies are performing at their best. So we are not passive, and that is an important point.”
Surprisingly, at IAG’s capital markets day last November, Walsh went on to comment on Mick O’Leary: “Michael has made no secret of the fact that he believes our structure represents an opportunity. I think they will get there eventually. The difference is, however, Michael, I think, will struggle to take his hands off what Ryanair does and will therefore be involved.” That is Walsh’s way of saying O’Leary will continue to meddle in Ryanair’s day-to-day affairs.
It was Willie Walsh’s stated plan to increase IAG’s current 12.9% group return on capital employed to 15% and to grow earnings per share by 10% pa over the next three years. Because of Brexit and the coronavirus threat, IAG’s shares have fallen from a high of £7.27 in June 2018 to a current low of just £2.
MERGER
The adjusted earning per share of £1.17 last year leaves the shares currently on an incredibly low four times price-earnings multiple and, if Walsh’s plan (post coronavirus) does come to fruition, a three-year prospective three times p/e multiple.
This is the kind of rating associated with basket cases, so it is not surprising that Qatar Airways has increased its stake to 21.4%. Indeed, an eventual merger of IAG and Qatar could be on the cards and, given the pivotal role he would have played in any such scenario, Walsh’s premature departure from IAG is a blow to the airline group.
Although his successor, Luis Martín, should do a competent job, he is unlikely to fully fill his predecessor’s shoes.
Reference the Market Abuse Regulations 2005, nothing published by Moneybags in this section is to be taken as a recommendation, either implicit or explicit, to buy or sell any of the shares mentioned.
Starbucks look a decent buy
Analysts at Danske Bank are also encouraged to see China’s Purchasing Managers Index surge to 53 in March, from 28.9 in February (a quite astonishing rebound).
Yes governments forcibly shutting down businesses is totally capitalism.
It’s amazing what businesses will do at gunpoint
About as believable as their coronavirus numbers
Stock markets are SURGING
We have it cracked