Thanks for sharing this article! Good read, and certainly useful for most new investors.

“In good times, I was in a good mood and smiled at everyone at work. When the market went down and I lost money, everyone in the office was like my enemy. It stressed me out and I did not like it.”

I'm sure most who started have this feeling - including me in the past .

Also, everytime when emotions start to take control - I tend to re-read "The Intelligent Investor". Think it's a good book for starters.

Not sure on your question.. but regarding the savings.. they did have cost cutting measures but not sure how long it can last them. They spent so much paying 3.4bil of dividends before COVID, and spend on "growth projects" such as BigPay/Teleport/Santan and now their current ratio is only 0.61. Currently their cash flow for year ending dec 2019 from operating is around 3bil, now imagine if this is negative for the year 2020.

These are their current liabilities - if they can differ this then yes - they can survive.. barely, and use up all their current assets to maintain the day to day expenses that cannot be delayed such as staff salary etc.

Trade and other payables
Aircraft maintenance provisions/ payables
Sales in advance (this is where they are trying not to refund your tickets )
Amounts due to associates
Amounts due to related parties
Amounts due to joint ventures
Borrowings
Lease liabilities
Derivative financial instruments
Provision of taxation
Liabilities directly associated with assets held for sale

Collapse is imminent?? If airasia recover which they should with such a low oil price now

You need to read this

https://www.thestar.com.my/business/busines...olitical-shocks

Look at their hedging "strategy"


On another note..
Southwest Airlines (LUV) on Tuesday reported a $94 million loss in the first quarter, and CEO Gary Kelly warned the losses will get worse in May — projecting revenue to drop as much as 95%.



This post has been edited by Raymond_ACCA: Apr 28 2020, 09:44 PM

Airlines are not worth the investments, risk outweigh reward

Y not if u buy and sleep and wake up after 5 year

Reasonable thinking. I mean there's some logic behind the thinking. Given time, surely AA would recover, right? I mean give it long enough time, there's a good chance that AirAsia will be back flying every where....

There's a saying... time is a friend of a good business.... cos good business grows over time. However this theory doesn't hold for the weaker business. Air travel has gone much, much cheaper in time but there's more competition, more airlines adopting the same strategy and extremely competitive in pricing and costs aren't getting cheaper. So in a sense, this is a damn lousy business to be in. You gotta be damn good to survive.

Anyway, let divert and show you a chart. Well, the thinking is about the same. You wanna bet on a 5 year time frame. But before you do that, wouldn't you want to know how AirAsia did exactly 5 years ago?

Chart 1... this is chart shows it as it is.... ie the exact traded stock prices before and after the special dividends which AirAsia paid out...

AA stock performance since 2015. (5 years ago - give and take la)



Chart 2 ... this chart shows after the prices are adjusted after the dividends are paid out....



Now many use charts to predict. Me? I try to understand what the market tells me about the stiock.

ok. First 1 will IGNORE the after Jan 2020 period. Now the chart tells me clearly the good times is over. The stock peaked in early 2018. What are the significant events that lead the stock to fall?

before 2018, You have the hefty special privilege placement of shares to Tony and side kick. Then we have sales of AA own leasing arm. Billion dollar sale. And AirAsia had already embarked on their sale and leaseback of airplanes. Loads of money will be flowing into AirAsia (how convenient the share placement to Tony). Speculation was so panas that AA was giving away 'free money' back to shareholders. Of course, the greed of money drove the stock higher....

the stock then started paying the special dividend of 40 sen on Dec 2018 and another 90 sen on Jul 2019.

so despite all the market feel good news, the stock had been declining.

So base on this 5 year time frame, this signals to me is that AA had already 'peaked' since early 2018. And this was before the C19 became full blown....... so would i bet that the next 5 year time frame, the stock would recover and fly higher?

That's my opinion... 3 sen nia ...... what's yours?

Yea, base on this, would you dare bet on a horse that is already weak since 2018?

No other stock to bet on?

Anyway, as it is, with no 100% vaccine, no one will be gung ho on air travel. Every country will have their own way on dealing with the virus. Some will impose quarantines on visitors from overseas. If there's a 2 week quarantine on arrivals, how many air travelers would want to fly to that country? What if some country impose a no fly zone? And surely, once air travel continues, airlines will resume their price wars to seduce air travel. What about social distancing on flights? If there is, there will be plenty of empty seats per flight. When do you expect normal air travel to continue?

So many questions/doubts yes?

Now back to AirAsia. The next QR wont be that bad, since we will still see some revenue, since the QR is for Dec 2019 to Feb 2020 period. The bad and worrying one is for the current months, when AA is practically not flying. That report only comes in Aug 2020.

So if you wanna bet, don't you think it's a safer bet to bet after Aug 2020 qr report? Betting now, the risk are aplenty. So much worry. Can AA survive? If not, how bad a bailout is required? etc etc etc .....

Anyway, sorry for long post.

GL

Boon 3, very insightful and straight to the point on AA. Thanks for the share.

Just finished watching Berkshire's annual shareholder meeting. They sold 100% of their holdings in the 4 major airlines which they had stakes in.

I think the only ppl that will support airlines now are the gov.

Some investors might follow WB and dump their airlines shares around the world.

anyone play this airlines stock now is gambling not investing.

This stock is touch & go only..
Just to ride... No logic no feeling no long term etc.

Can always buy back when it half way for rich fella... unlike most of us miss the train

AirAsia Unlimited Pass' travel period extended for another three months
(2 March 2021 to 30 June 2021)

okay lorh.. make people happy...

do u think AA or MAS is doing better?!

AA has been losing money over the last 2 quarters and barely broke even over the whole of 2019 (even before the pandemic strikes).
Right now with the pandemic lockdown all around the world coupled with the collapse of crude oil price, triple blow to AA.
Logically, if SIA could report a loss, what are the chances of AA beating that?

previously mention report that AA would be posting over 1Bil losses..
but looking at the situation now... I suspected it's would be even worse...

As mentioned earlier...

The next QR wont be that bad, since we will still see some revenue, since the QR is for Dec 2019 to Feb 2020 period. The bad and worrying one is for the current months, when AA is practically not flying. That report only comes in Aug 2020.

Eyes will be on his sidekick statement on its furl hedge



https://www.nst.com.my/business/2020/04/588...rasias-expenses

Its last qr, it mentioned it had 11.4 million barrel of jet fuel hedged.....

That's what I will be watching....

I agree with the posters above, Airlines are in for a rough ride, there is simply too much competitions, pricing pressures compounded by weak travel demand and poor economy -> less discretionary spending (due to COVID), things aren't looking good for sure.

i am an avid investor of AA and i have about roughly 200 lots of AA in my portfolio.. my average price is around 1.2..which i have accumulated over the years.. but after looking at the effects of COVID, im not sure wether to just swallow the hard pill and take losses and focus on other stocks .. i am down about 40% now