However, let's talk about the company itself.
How did Airasia got so big?
Was it because it used debts/leverage to built itself up?
Buy/borrow/buy... use whatever cash flow to buy new planes again.
That was what it did. Agree?
That was obviously not gonna to last. It got to the point where Airasia had only less than a billion in cash and more than 12 billion in loans.
That buy and borrow had to slow down. So it asked to defer its obscene backlog of new planes.
Got breathing space but not enough. Clearly it was grossly over leveraged.
** in the midst came that 18billion usd new airplane order. In which the following year, that chapalang F1 team got a usd50 million sponsorship. The F1 team that was not owned by Airasia. Duh **Next came the leasing plan.
Sell whatever plane it had and then lease back. Use the money to pay back loans. And yeah, to hook investors in, despite in dire need of money, Airasia gave away millions in dividends.
New planes also sell.
So the balance sheet bank borrowings came down in a hurry. But the lease amount soared.
Financial engineering at its finest.
But now with lesser planes flying, can Airasia be able to finance its leases???
And yeah,
Airasia still got plenty of planes ordered with Airbus. Latest quarter, the amount is 99.6 Billion. 99.6 Billion. Not too much?
Can this buy, sell and lease back be played for so long?
And yeah, every company hedges. It is a norm. However, there are some companies who over does it their hedging turns into gambling. Have you check how much? If I say their total hedges is more then 2.5 Billion... would you say too much?
Many years ago Airasia once lost more than 500 million in hedging. Tony had to apologise and say no more betting. But yet after these many years, Airasia is still hedging. Betting on oil, interest rate and currency. All which had been having huge swings. A bad hedge could see Airasia lose millions.
Latest qr? Any hedging losses? Better go check......
And yeah, its qr is getting more complex to read. So many inter related companies. How does one really gauge the validity of its accounts? So if I have to base any trading decision on such a company, I always, always take the easy way... No bet. If it goes up, so be it.
Anyway gl.
....... that chapalang F1 team USD50 million 'ahem sponsorship' ....
so we all now that this was part of the corruption investigation where Airbus agreed to pay over USD3.9 billion in fines.....
On a separate note...
What is even more interesting is the news on AirAsia chairman who paid RM364 million for insider trading.... (no mention on this thread?
May 16 2020, 08:10 PM
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