Cube Report (18 Nov 2020) – So many pennies from IMB’s dividends
I’ve decided to run today’s show at 6pm. Later than planned but I have to get my car tested this afternoon, so it’s the only way I can make it work.
See you then! Here’s the location:
An update from yesterday I want to mention:
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|Market cap||£3.45 billion|
|Writer disclosure||No position.|
An update from yesterday that I want to mention.
- Planned capacity: 20% for Q1 2021.
- FY September 2021: passengers down 50% to 48 million
- Load factor falls 4.3 percentage points to 87.2%.
I have to agree that it’s an impressive load factor in the circumstances. Flying activity was crushed, in line with reduced demand.
Though from what I understand, it’s not really illegal to go anywhere – is it? But you might be forced to quarantine in a place like Italy. Doesn’t sound fun.
Looking through the various metrics, I see that cost per seat increased by 21.7% to £69.03 – this is operational leverage in reverse, offset by a reduction in the cost of fuel.
Revenue per seat fell 10.6% to £54.35 – a solid H1 combined with a terrible H2.
Loss before tax: £1,273 million (or £835 million after adjustments).
Net debt: £3.1 billion. Available liquidity is £3.1 billion.
Outlook – “we retain the flexibility to ramp up capacity when we see demand return”. No specific guidance for 2021, which is probably fair enough.
It’s obviously quite a grim situation.
It does continue to maintain that is has “a significant cost advantage compared to legacy carriers“.
The liquidity is impressive. Cash of £2.3 billion (Sep 2020), but the most recent quarterly cash burn was £651 billion. Cost cuts are obviously very important, in this situation.
Gross borrowings are £2.7 billion and there are lease liabilities of £710 million.
I can see it pulling through, with the help of the aforementioned cost cuts. The market cap of c. £3.5 billion appears to price that in, so I don’t find the shares too exciting at this level, I’m afraid.
That’s it, see you tomorrow!