rballan

Folks,

All airlines are trying to raise liquidity at this time. Drawing down lines of credit, new secured term loans, government grants, and soon government loans. The airlines will be coming out the other side of this massively leveraged.

This begs the question: why not raise equity? While airline stock prices are down dramatically, most are not remotely near bankruptcy valuations. Issuing new shares would no doubt be dilutive to existing shareholders, but could be a source of considerable additional liquidity ($ billions) for the airlines.

I would very much like to hear the answer to this question BEFORE we are asked for concessions. We are labor, not risk capital.

Cheers - Rob.

rickair7777

Managers typically own plenty of the current stock, which would be diluted?

Flyby1206

I think this will come after they have mortgaged any assets like planes/slots/etc. Why sell shares now when prices are at multi-year lows if you can wait a few months at least?

AllYourBaseAreB

You only want to sell shares with expected future growth, NOT massive contraction or bankruptcy being equally, if not more, likely

Tom Bradys Cat

Didnt united just flick off some assets for cash?

AllYourBaseAreB

Yes
22 planes on lease back from bank of china

BlueMoon

UAL just announced selling 39.25 million shares to raise about a Billion dollars.

https://www.cnbc.com/2020/04/21/unit...s-revenue.html

Flyby1206

Oh man, someone do the math on what they spent previously to buy back 39.25mil shares vs what they will sell it at

CLazarus

Well, at a charitable $65 a share they would have spent about $2.55 billion. Total of buybacks over the last 5 or so years was $8.7 billion, I can't do that additional math without getting emotional.

Here is how I could have spent that money more wisely in the first place. Could have taken roughly $5 billion dollars of it in cash and piled it all up in front of the NYSE building, sprayed lighter fluid on it and had one amazing weenie roast. Take a couple billion and buy back shares at today's price of $26, removing 78 million shares from the market (making it a rough wash with where they are going to end up with this new issue). And, I'm sure that $1.7 billion in pocket change left over could have come in handy some time.

Serious note, putting 'shareholders first' is a concept in the management of public corporations that needs to be euthanized and buried in concrete.

Flyby1206

Shareholders first? Or executive stock-based compensation first?