16,000 what?

Oh the pain!

More heavy thinking from Niall Ferguson on Marx, Engels, etc.

One Response to “16,000 what?”

  1. feeblemind Says:

    Just How Bad Is It Going to Get for US Airlines?

    “Airline stocks have been getting crushed, first by the issues stemming from the Boeing 737 MAX, and now by the issues stemming from the coronavirus containment efforts, even this morning, despite the tumultuous rally in the US stock market overall.

    Since January 18, just before the measures to contain the coronavirus outbreak began threatening the travel industry, through around mid-day today, the stocks of the seven largest US airlines by market capitalization have all plunged:

    Delta Air Lines [DAL]: -27%
    Southwest Airlines [LUV]: -17%
    United Airlines [UAL]: -35%
    American Airlines [AAL]: -36%
    Alaska Air Group [ALK]: -26%
    JetBlue Airways [JBLU]: -21%
    Spirit Airlines [SAVE]: -37%
    In China, the government has just taken over HNA Group, the troubled conglomerate that, after a debt-fueled global acquisition binge, ended up with about 18 airlines in China and Hong Kong, plus the world’s third largest aircraft leasing company, plus airline caterer Gategroup, plus the world’s largest airport ground and cargo handling company Swissport, among other acquisitions. The government takeover was designed to avoid a messy collapse.

    For US airlines, travel restrictions will continue to tighten, and Americans will continue to reduce their travel plans, even domestically.

    Even after the coronavirus fades as an issue, whenever that may be, travel will take time to recover. Meanwhile, the ongoing operating expenses and interest expenses, mixed with the sharp reduction in revenues will likely result in negative cash flows, putting a heavy cumulative financial burden on airlines.

    After the plunge in share prices, PE ratios are now low, but once losses are reported – and they will be – those PE ratios will disappear.”


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