Airline stocks to watch on Monday

With the new Spain quarantine order imposed by the UK government it would be interesting to see how the airline stocks (IAG, EZJ, TUI) performs tomorrow.

Do any of these carry a risk of going down in the next year?

Yes all of them carry the risk.

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I don’t think the spanish and british governments will let IAG go bust, I don’t think it can happen, however, there is the possibility of shareholders being VERY diluted if things go very wrong which can result in very heavy losses.

On the other hand, there may be significant up side in the medium term of 3-5 years. I think IAG will do well, but its part of my risky portfolio (with the likes of GGP). I think a share issue would be a good idea to give it even more liquidity and in the long term it could result in a very profitable investment.

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In the next year – all of these are in extreme amounts of strife. IAG has just announced or completed (I dunno, I don’t own the stock) an equity raise, so its share price dropped accordingly. Note that in doing this it is just following the example of various US airlines. I suspect none of these is in danger of going bankrupt but I think these have at least a two year road to recovery. If you’re interested in Graham-style investing for the very long term, then you might like the look of what you see here. But I wouldn’t expect to see substantial improvements in their balance sheets until at least Q3 of 2022.

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All of them… we are not even talking about the second wave yet. :airplane::slot_machine:

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I don’t think it has been officially announced.
What has happened is that they have “grape vined” to the press that they may do an equity raise in September/October, I guess so that the market “can see it coming” and insn’t very surprised when they announce it.

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If what you’re saying is true here, then this is absolutely criminal from the management.

Apparently it has now been confirmed:

But I am confident that initially it was “off the record”.

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I’m ok with the idea of having an equity raise if they need to bring cash on board – seems a fair enough way of doing this. But it is surely almost too obvious to state in the management textbooks that if you plan on selling something (in this case shares) to raise capital, you don’t want to tank the value of the thing you’re going to sell before you try to sell it.

They probably don’t want to be negatively affected when they do actually make it official.

Currently the price is quite low and such a news won’t have pulled it down much more. The reason why it fell yesterday and is falling today was the UK travellers from Spain, including UK citizens returning from holiday.

I think it is best to keep market expectations realistic, also in September there may be better news that increases the share price. You never know.

I hold Easy in my portfolio and I’m watching the market cautiously. I think they will survive. But I think it’s going to be a rough few years for any airline

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That’s a pretty low bar for an investment.

The discussion was if there was a risk of them going down this next year or so, I figured we mean going bust based on context. I’ve made clear my reasons for holding them long term elsewhere. For me I think easy have managed this crisis the perfect balance of responsibility to customers and to shareholders.

That said, it is definately a position on my portfolio that I am holding for a long time (3+ years) rather than aiming to short in anyway

Thanks, that’s helpful.

(EDIT: I happen to agree with you that EasyJet management have handled things as well as they can be handled.)

Agree - it’s not going to be a smooth flight, there’s going to be lots of turbulence for next few years.

It’s a sector that depending when you bought it… maybe worth to put the money in something else for a while then come back still below your entry point.

If a second lockdown happens, and it’s very likely that it will… I don’t see any chance for any airline to return a pre-covid values in less than 3 to 5 years.

or do a big buy right now (wait for the second wave haha), just seating a pre-covid money there seems a waste of time/money… imho.

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